The first-quarter results Goldman Sachs Group Inc. announced Tuesday were so astonishing and so far beyond estimates that the company’s chief financial officer felt he had to tone things down a bit.
“One quarter’s performance, weak or strong, should never be annualized,” said David Viniar. “I can say the environment for almost all of our businesses continues to be favorable, but conditions can change quickly. There will be difficult quarters ahead.”
Analysts agreed–to an extent.
“To think they’re immune [from market fluctuations] would be very imprudent, and I’m sure they’d be the first to agree with me on that,” said Guy Moszkowski of Merrill Lynch. “But from everything I can infer, the second quarter is starting out just as strong as the first.”
Buoyed by revenue from merchant banking and record trading and money-management fees, Goldman Sachs’ net income surged 64 percent, to $2.48 billion, the largest quarterly profit in the history of the securities industry.
“It all went right. That’s all you can say with a number like this,” said Anton Schutz of Mendon Capital Advisors Corp.
The earnings equated to $5.08 a share, more than 50 percent higher than analysts’ forecasts of $3.29 a share. Revenue jumped 61 percent, to a record $10.34 billion, topping estimates by more than $3 billion. The company’s earnings for the three months ended Feb. 24 were greater than it netted in all of fiscal 2002.
“This type of massive upside surprise … makes forecasting a futile exercise,” David Trone, an analyst with Fox-Pitt Kelton Inc., said in a note to clients.
A year ago, Goldman Sachs earned $1.51 billion, or $2.94 a share. The company also raised its dividend to 35 cents a share from 25 cents.
Shares of Goldman Sachs climbed $8.70, or 6.2 percent, to $149.42, on the New York Stock Exchange.
Goldman is the first of Wall Street’s five biggest investment banks to report first-quarter results. Lehman Brothers Holdings Inc. and Bear Stearns Cos., the other two investment banks reporting this week, also are expected to post impressive numbers.
