Goldman Sachs Reports $1 Billion Profit

Accusations that Goldman Sachs GS is attempting to take over the world are proving to have legs, as Goldman Sachs posts a profit of $1 billion. OK, that is an exaggeration (the accusations, not the profit). The profit is significant in this economic climate, but not necessarily unusual. What makes the number newsworthy is the fact that it reverses a loss from the third quarter and tops expectations. Plus, GS has achieved the big billion with revenue that has declined from a year ago and missed analyst's forecasts. It is always going to be difficult to weep for a company like Goldman Sachs, and $1 billion does a hell of a lot more than paper over cracks. It practically cements them together. According to CNN, GS reported diluted earnings per share of $1.84 for 4Q, while analysts were expecting $1.24 per share. Net income totaled $978 million in 4Q, compared to a loss of $428 million in 3Q. The company earned over 2.2 billion for 4Q10. And the numbers keep coming. GS reported net revenues of just over $6 billion for 4Q, up from $3.6 billion in 3Q but way down from $8.6 billion this time last year. Analysts were expecting revenue of approximately $6.5 billion, nearly twice what it actually was. GS CEO Lloyd Blankfein is, of course, standing tall. $1 billion allows that. Despite net revenues in investment banking being down 43 percent in 4Q to $857 compared to last year, Blankfein said that he was seeing encouraging signs of improvement in the markets and economy. According to CNN, “Goldman, a firm known for its annual bonuses, also reported a decline in compensation and benefits of 21% in 2011, to $12.2 billion, compared to the year before.” However, to the eternal credit of the investment bank, GS has set aside $12.3 billion to pay its staff, an average of $367,000 each. That is a greater proportion of revenue going to pay staff than a year earlier. Even the biggest corporation has a heart.