By Joseph A. Giannone

NEW YORK (Reuters) - Goldman Sachs Group Inc reported its first quarterly loss since going public nine years ago as plunging stock, debt and real estate markets caught up with a Wall Street leader that had sidestepped the worst financial crisis in decades.

But investors, bracing for deeper losses, appeared relieved, sending Goldman stock up 14.4 percent on Tuesday and helping lift the broader U.S. stock market. Shares of rival Morgan Stanley, which is set to announce its results on Wednesday, surged 18.3 percent on Goldman's report and the Federal Reserve's decision to cut rates to a range of zero to 0.25 percent.

Goldman posted a net loss of $2.12 billion, or $4.97 a share, for the fourth quarter ended November 28, capping a year that tarnished its Midas touch reputation.

The loss exceeded the average analyst target of $3.73 a share, according to Reuters Estimates, yet privately many investors feared the results could have been as high as $6 a share.

"The fear in the market was that the results would be much worse," said Walter Todd, a portfolio manager at Greenwood Capital Associates in Greenwood, South Carolina.

Writedowns and losses on investments, leveraged loans and mortgages topped $5 billion as virtually every market tumbled in recent months -- a period during which Lehman Brothers Holdings Inc sank into bankruptcy, Merrill Lynch & Co Inc sold itself to Bank of America Corp and the U.S. government bailed out the banking industry.

That loss exceeds the $4.9 billion in writedowns that Goldman has reported in the past two years since the credit crisis began last year.

Yet some analysts said investors are anticipating a thawing in the markets, which would begin the recover of asset values.

"There is so much liquidity, and it grew even more when the Fed cut rates, that when you start to see normal market activity there will only be a thin herd of competitors who can compete for these dollars," said Douglas Ciocca, a managing director at Renaissance Capital Corp in Kansas City.

UGLY QUARTER

A disastrous environment took a turn for the worst in September, as investors lost confidence that Wall Street's broker-dealers could survive. Cash-strapped banks and funds were forced to sell assets and generated crushing markdowns for brokers.

Goldman was forced to seek $21 billion in fresh capital from the U.S. Treasury, public investors and Warren Buffett's Berkshire Hathaway Inc -- and converted to a bank holding company hoping to reassure investors it could survive.

Goldman slashed its balance sheet by nearly 20 percent to $885 billion during the quarter, boosting its capital ratios and paring leverage. The bank also cut its payroll by about 2,500 employees in the fourth quarter, down about 8 percent from the previous quarter.

Still, the fourth quarter was ugly, as expected. Goldman's mammoth trading and principal investing results were its worst since the bond market turmoil of 1998.

Bank-wide writedowns outstripped revenue from banking and trading, resulting in negative revenue of $1.6 billion -- a far cry from the $11 billion revenue recorded a year earlier.

In the year-earlier period, Goldman reported record net income of $3.2 billion, or $7.01 a share. Goldman managed to turn in a record year, through hedging and timely bets against subprime mortgages, even as the rest of the industry suffered humbling losses.

Goldman is also reinventing itself as a bank, figuring out how to make money in a world where merger activity has slowed and financial markets are still frozen.

"We were an investment bank for 139 years and a bank holding company for three months. We're still a little new at this game," Chief Financial Officer David Viniar said on a conference call with reporters.

Goldman and others became bank holding companies in September to take advantage of stable deposit funding. But as a regulated bank, it has hadto reduce its leverage, making it hard to achieve the same levels of profit.

Viniar said Goldman intends to expand its deposit funding to as much as $50 billion to $100 billion over the next year from about $20 billion now. Viniar said Goldman looked at a number of bank takeovers but so far has chosen not to proceed.

For now, it will seek deposits through brokers, its wealth manager network and possible through an Internet bank.

NO BIG CHANGES

Even so, Viniar said Goldman the bank holding company would not change its stripes. It will continue to finance deals and invest firm capital and take risks if it sees an opportunity. Viniar stressed that its investments, depressed by panicky markets, would likely rebound in time.

"Many of these positions represent excellent long-term investments," Viniar said.

Moody's Investors Service cut Goldman's credit rating one notch to "A1" and said the firm's outlook remains "negative," but credit markets shrugged off the downgrade.

Goldman posted its first loss since the fourth quarter of 1998, when Long-Term Capital Management's collapse and the Asian debt crisis roiled bond markets.

Fixed-income, currency and commodities trading generated negative revenue of $3.4 billion and principal investments recorded a loss of $3.6 billion, partly offset by a 2 percent rise in equities trading.

It was Goldman's first loss from trading and principal investments since 1998.

Investment banking revenue fell by half to $1.03 billion. Goldman's backlog of pending deals dropped during the quarter, ending November "significantly lower" than a year earlier.

Amid the declines, Goldman slashed full-year compensation and benefits in half to around $10.9 billion, or $364,000 per employee. Last year, it paid out a Wall Street record $20.2 billion in compensation.

Shares of Goldman closed up $9.54 at $76 on the New York Stock Exchange, or about three-quartersof the bank's book value at the end November. The stock soared as high as $78 during the session and was among the biggest net gainers on the NYSE.

Goldman shares fell by more than two-thirds this year, and more than half since September.

(Additional reporting by Elinor Comlay and Dan Wilchins; Editing by John Wallace and Jeffrey Benkoe)

Publié le 16 Décembre 2008 Copyright © 2008 Reuters