Meredith's estimate Goldman Sachs fy 2009 earnings is $16.59 (up from $10.80).
And her estimates for Goldman Sachs for fy 2010 is $19.65.
Of course, her numbers is well above what the other pros from Wall Streets but mind you, Meredith was the closest in her estimates of $4.65 a share the other day (the street estimates were around $3.48). GS did $4.93.
Me?
As usual, since I am no pro and do note I could be so wrong also, I think her estimates could be conservative. By 2010, as much as my dislike of how Goldman Sachs and the financial industry, I do believe that Goldman Sachs could perhaps generate earnings of $35.00 for its fiscal year 2010.
Yes, that much, I reckon!
Of course, this is my estimate and there is a strong likelyhood that I could be wrong.
But if I am correct, don't you reckon Goldman Sachs is worth a shot now?
Don't you think Goldman Sachs is worth a bargain at 156.00?
LOL!
Can't believe what you are reading?
Me too! I cannot believe what my fingers are doing right now. :p2
So how now my dearest?
Not too late to look for entry to buy this stock! :p2
Here's the time stamp. :D
Or how about Unker Buffy? As per posting, Berkshire's Sitting On A Tidy Profit From Its Investment In Goldman Sachs, Berkshire is sitting really pretty on its investment in GS and more so that Berkshire's investment generates an additional 10% dividend yield per annum. Brka is now trading at $90,245
ps. GS was only 149.00 then.
ps. I think there's a strong chance that Berkshire could see a four bagger in this investment within a five year time frame! Yes, a four bagger! Which means GS should be worth at least.....
Wow! A bank that powerfully can command the FED to print unlimited amount of money for its use to bailout at the instant of trouble surely can earn unlimited profit and the stock price must skyrocket to the heavenly planet star among the star of galaxy universe .
ReplyDeleteSaturday July 18, 2009
ReplyDeleteGold at Goldman Sach’s?
A QUESTION OF BUSINESS
By P. GUNASEGARAM
Try as I might I found it impossible to find out the exact source of a great earnings turnaround at the venerable or notorious (depending on your point of view) US banking group Goldman Sachs for the second quarter of this year.
But two things will colour this turnaround and in effect will pose serious questions to the US government about how it handles the financial crisis going forward, when bailouts at some financial firms could be buttressing profits at others.
First, how do you handle vast payouts in compensation at firms which directly or indirectly benefit from government bailouts? Goldman’s compensation was a staggering half of net revenue of US$13.8bil in the second quarter. More on that later.
The second – and more important issue – is how to rein in all manner of risky financial products packaged by savvy but greedy investment bankers who have an eye only on immediate profit and care little about their impact on the financial markets.
On those two questions may well turn the fate of the financial world and whether it will be permitted to bring our planet – again – to the brink of disaster.
But first, a bit about Goldman’s results. It made net earnings of US$3.44bil for its second quarter ended June 26 (it’s a funny quarterly end but that’s the way it is) this year, up 90% from the immediately preceding quarter and 65% from the quarter to May 30, 2008.
What is interesting is its compensation package of a total of US$6.7bil, almost 50% of net revenue and more than its net profit. Its non-compensation expenses in contrast were just US$2.1bil. More than three-quarters of operating expenses were salaries!
Why is compensation so high? This is a company which received US$10bil in financial help from the US government and billions more in cheap funding from the Federal Reserve when it transformed itself into a bank-holding company. And it played a huge role in the financial crisis by originating and selling a lot of subprime mortgage loans.
ReplyDeleteOn top of that it directly benefited to the tune of US$13bil from a US government’s US$173bil bailout of the AIG group which provided guarantees for subprime mortgage loans, a lot of which were issued by Goldman Sachs itself. If earlier collateral payments by AIG to Goldman are taken into account, the total amount received by Goldman from AIG could rise to close to US$20bil.
Perhaps it would help if we knew how Goldman got its income. Then it might be possible to ascertain if employees really deserved the sums they got – an average of over US$200,000 per employee for just the second quarter alone!
But Goldman’s income statement sheds no light. The only major jump from a year earlier was a 78% increase in revenue for “trading and principal investments” to US$9.3bil. The company does not break this down further.
Chairman and CEO Lloyd Blankfein’s explanation is unhelpful: “Our role as an intermediary focused on making markets for buyers and sellers and helped drive our performance.”
What were they selling at such huge gains to themselves? Pre-tax earnings were over a third of net revenue which means it was engaged in pretty high-margin business. And should its staff be paid so much for just an intermediary business?
Paul Krugman’s article on Page 16 outlines some of the ways in which Goldman makes money. And if it were to continue to operate in this way, not much would have been done to restructure the financial system.
Others blame Goldman for a litany of sins. For a sample see this article here: http://
www.rollingstone.com/politics/story/29127316/the_great_american_bubble_machine. Let me warn you that the article is long but makes interesting reading.
If just a fraction of what it says about Goldman is true, we still have a pretty long way to go to putting the international world financial architecture in order.
Let’s not allow ourselves to be lulled by Goldman’s earnings.
Goldman’s strong profit growth is not necessarily a harbinger of better things to come. Instead it is a serious test to see if the US government will keep excessive rewards in the financial industry at bay and through that the excessive risk that they take to make profits.
·Managing editor P. Gunasegaram says alarm bells should ring if the total value of derivatives is higher than that of the underlying assets.
http://biz.thestar.com.my/news/story.asp?file=/2009/7/18/business/4345125&sec=business
Goldman saga not so rosy
ReplyDeleteDiane Francis, Financial Post
Published: Saturday, July 18, 2009
This week the headline should have read: "Goldman Sacks America's Taxpayers" instead of Goldman Sachs posts a US$3.88-billion quarterly profit. The Wall Street firm's workers are licking their lips at the thought that the firm has set aside enough money to pay out billions in bonuses this year, equivalent to US$770,000 per worker.
This is pretty shocking, even by Wall Street standards, given the firm's profits derive from direct and indirect taxpayer bailouts forked out by Mr. and Mrs. Average American Taxpayer.
Goldman this week defended itself by reiterating that it received US$10-billion in TARP bailout money last year to avert bankruptcy but has repaid that amount in full.
That is true, but that's only a fraction of the bailout.
Goldman received an estimated three times more, or US$30-billion, in an indirect bailout funnelled through bankrupt insurer AIG International.
Washington bailed out AIG's counterparties, to whom it owed hundreds of billions, because AIG had sold to them unbacked credit-default swaps (a form of insurance on bond values). Goldman was not only ahead of the queue in collecting its IOU but is reported to have gotten 100¢ on the dollar to boot.
Goldman was made whole even though it is arguable that it was imprudent to buy these swaps, which were not actuarially approved and had no capital behind them, as insurance products are supposed to. Even so, Goldman and AIG's other foolish customers got backstopped for lousy business practices.
The point of all this is Goldman Sachs cannot argue the proceeds it got from the AIG rescue did not constitute an indirect bailout any more than can auto-parts makers thatd are saved by Detroit's bailout. Goldman Sachs, like other indirect beneficiaries, should pay back all tax dollars funnelled through AIG out of profits.
The Goldman shenanigans mark a low point in Republican cronyism and represent the biggest single Bush bungle if you don't include in the list of misdeeds the 4,000 dead and US$3-trillion unnecessary war in Iraq.
The Goldman-AIG bailouts were inked during a panicky weekend last September after the firms, plus Lehman Brothers Holdings Inc., told Henry Paulson, the former U. S. Treasury secretary, they were broke. Paulson should have never been appointed in the first place because he had conflicts of interest after pocketing hundreds of millions a handful of years before as CEO of Goldman Sachs.
But he was. So having been put there, he should have recused himself from any fiduciary dealings involving public funds aimed at replenishing the coffers of his old firm.
Frankly, the Obama regime and Congress should put a lien on Goldman Sachs, and any other AIG counterparties, then negotiate reasonable repayment terms.
dfrancis@nationalpost.com