Fourth-quarter net income dropped to $1.01 billion, or $1.84 a share, from $2.39 billion, or $3.79, in the same period a year earlier, the New York-based company said today in a statement. Per-share earnings exceeded the $1.23 average estimate of 26 analysts surveyed by Bloomberg, whose predictions ranged from 70 cents to $2.50.
Chief Executive Officer Lloyd C. Blankfein, 57, reduced compensation 21 percent for the year as he cut costs and focused on international growth to help offset a slowdown in trading, which contributes most of the firm's revenue. He has said he wants to prepare for a market rebound, even as he eliminates jobs and adapts to new rules that limit the bank's ability to invest its own money and make trades for Goldman Sachs's own account.
Chief Executive Officer Lloyd C. Blankfein, 57, reduced compensation 21 percent for the year as he cut costs and focused on international growth to help offset a slowdown in trading, which contributes most of the firm’s revenue. He has said he wants to prepare for a market rebound, even as he eliminates jobs and adapts to new rules that limit the bank’s ability to invest its own money and make trades for Goldman Sachs’s own account.
“There seems to be continued emphasis on cost control and compensation control and that’s a good thing,” said Charles Bobrinskoy, the Chicago-based vice chairman and director of research at Ariel Investments, which has about $5 billion under management and owns Goldman Sachs stock. “People have known that the trading environment has been lousy.”
Net income for the year fell 47 percent to $4.44 billion, the lowest since 2008. Return on average common shareholders’ equity was 3.7 percent for the year, down from 11.5 percent in 2010.
Revenue for 2011 dropped 26 percent to $28.8 billion, the lowest since 2008, and declined 30 percent in the fourth quarter to $6.05 billion. The average estimate of 18 analysts surveyed by Bloomberg was for $6.39 billion in fourth-quarter revenue.
Compensation, the company’s biggest expense, decreased 21 percent to $12.2 billion for the full year and 2 percent to $2.21 billion in the fourth quarter. The cost was 36.5 percent of total revenue in the quarter and 42.4 percent for the full year. The total number of employees fell to 33,300 at the end of December from 34,200 three months earlier and from 35,700 a year earlier.
Discretionary compensation for 2011, which refers to cash and equity bonuses, declined “significantly more” than 2011 revenue on a full-year basis, Michael DuVally, a spokesman at Goldman Sachs in New York, said in a telephone interview today. He declined to provide a precise percentage drop or amounts.
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