Goldman to cut jobs after Q2 revenue plunge
After falling short of its quarter two estimates, Goldman Sachs is likely to lay off 1,000 employees by the end of the year.
Goldman Sachs reported a sharp drop in fixed-income trading revenue Tuesday, causing the investment bank’s second-quarter earnings to fall far short of Wall Street estimates.
Goldman, which makes most of its money from trading, saw fees from debt, currencies and commodities trading decline 63 percent from the previous quarter — more than twice the drop at other major U.S. banks, Bloomberg News reports.
Overall, Goldman earned $1.05 billion, or $1.85 per share in the second quarter, far below the $2.27 per share analysts had forecast. Revenue dropped 17.6 percent to $7.3 billion, while expenses fell 23.3 percent, Reuters reports.
“It’s clear that Goldman underperformed many of its peers,” Richard Staite, an analyst at Atlantic Equities LLP in London, told Bloomberg News. “It seems to have prompted them into a cost-saving initiative.”
During a conference call after earnings were released, Chief Financial Officer David Viniar told analysts the bank is likely to lay off 1,000 employees by the end of the year as part of $1.2 billion in cost savings. The job cuts, representing 3 percent of the bank's 35,5000-member workforce, will affect both junior and senior staff, Viniar said. It will not, however, affect hiring in emerging markets like China, India and Brazil, which the bank views as areas of growth.
In a statement, Goldman CEO Lloyd Blankfein blamed the bank’s poor financial results on a tougher operating environment “given global macro-economic concerns” and its shift toward avoiding risk.
“Certain of our businesses had disappointing results as we reduced our market risk in response to attempting to manage fluctuations in prices and market liquidity,” Blankfein said in the statement.
Goldman’s stock fell 2.1 percent Tuesday, to $126.61 — its lowest level since April 2009.
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