Goldman Sachs net
falls amid IPO worries

Bloomberg News

NEW YORK -- Goldman Sachs Group LP, said fiscal third-quarter earnings fell 19 percent and fourth-quarter profits could be hurt, increasing speculation the firm will delay its scheduled November initial public offering.

Bishop Estate owns stake Goldman Sach Group's investors include Hawaii's Bishop Estate, which has paid about $500 million for an estimated 10 percent stake in the Wall Street powerhouse.

The timing of the IPO is likely to be a topic of discussion Monday, when partners and the executive committee of the world's biggest investment banking partnership hold regular meetings. The 129-year-old firm may now be worth about $20 billion as a public company -- about 40 percent less than it would have likely fetched two months ago before its competitors' shares tumbled.

"I wouldn't be too keen to do an IPO of an investment bank at the moment," Mark Williamson, a banking analyst at U.K.-based fund manager Albert E. Sharp Holdings Plc, said recently. "Clearly, it's going to be quite difficult to get that (IPO done) in these conditions."

Goldman said earnings before taxes and compensation for partners fell to $754 million for the three months ended Aug. 31 from $932 million in the year-earlier quarter amid global market turmoil. Goldman's results may suffer more in coming months if the turmoil continues, the company said.

Underwriting and trading fell from records in the first half "in an increasingly difficult environment," John Thain, chief financial officer, said in a statement. "We expect these conditions to negatively impact our fourth-quarter results."

Russia's default and currency devaluation last month triggered declines in other emerging markets and corporate debt securities, forcing many securities firms -- including Goldman rivals Merrill Lynch & Co. and Salomon Smith Barney Inc. -- to record hundreds of millions in trading losses. Stocks worldwide fell amid concern slowing economies in Asia and Latin America will crimp corporate profits.

Some of the company's 189 partners are questioning whether now is a good time to go ahead with the planned IPO, a person at the firm said. The committee overseeing the stock sale hasn't formally discussed postponing the offering, the person said. A spokesman at the firm declined to comment.

Poor fourth-quarter profits, a sluggish market for initial public offerings and a recent battering of financial stocks may make a delay inevitable, investors and analysts said.

Initial public offerings, Wall Street's most profitable underwriting business, dried up in recent weeks as stock markets sank. No new stock sales have occurred in the U.S. since Aug. 26, the longest period without a sale in more than a decade.