This is NOT new news! As a matter of fact, just take a peak at the estimate revisions for the last 60 days! They have all come down significantly.
Wan't to know something else? Analsysts were already EXPECTING THE WRITEDOWN.
I guess most of you shit for brains didn't realize that Mike Mayo, an analyst at Deutsche Bank, is forecasting a $3.5bn writedown by Goldman during the period due to its exposure to leveraged loans and commercial mortgage-backed securities.
So guess what? This is NOT going to suprise the analysts!
GS shares SHOULD rally from $155, especially if the deal between BSC and JPM gets done.
Shorts will either have a field day, or they will get their ass kicked. Time will tell.
You're right, it isn't new news. And GS had a better than expected quarter it seems. All these posts suggesting that since BSC went to $2 so will GS is specious. GS continues to make good money even during difficult times. That's one of their hallmarks. Just like not every bank is Citicorp, not every broker is in trouble. Unfortunately, fear is driving stock prices these days. I thought GS would move higher this week but fear (compounded by BSC and headlines like "$3b Writedown" may takeover yet again. Time will tell.
Your probably right. Look for capitulation tomorrow at the open, and a slow rise up from there.
Amatuers will panick and dump everything in the premarket, which may present an excellent buying opportunity.
I think GS may open down at around $153/share.
I don't care. I only own a small lot of shares, and will be buying on the dips.
Lehman has ALREADY adjusted estimates for GS and MS citing asset write downs and investment losses. The firm lowered GS Q1 EPS to $1.95 from $2.10 and MS to 93c from 97c.
Wachovia ALREADY expects an ugly Q1 for brokers but also said in their research that they would focus on firms that have managed to grow book, not dilute shareholders, and have better capital positions. Wachovia believes LEH and GS are better long-term investments and will recover faster than MER, BSC, and MS.
Banc of America ALSO already expects GS to have writedowns. They lowered their estimates by 27% overall as they assume incremental markdowns on LBO commitments/loans and RMBS & CMBS inventories and that the investment banking environment has continued to soften. They cut estimates on GS by 45%! They also cut LEH by 43%, BSC by 7% and MS by 15%. Once again, $3B writedown will be NO SUPRISE!
And HERE IS A DIRECT QUOTE from back in FEBRUARY...
"The world knows this quarter stinks for Goldman, as well as the others," says Glenn Schorr at UBS. "Goldman has tipped off investors for months that they make mistakes like everyone else. In addition there is a keen focus on expenses. However, the firm (GS) still does well with trading profits and risk management."
Translation? This writedown was foreshadowed back in February! Again, no suprise!
Should I continue?
Fox Pitt cut GS Q1 EPS estimates back in the middle of February to $2.58 from $5.30 and FY08 EPS estimate to $19.87 from $21.52 citing continued challenges in the credit market, leveraged lending, and corporates in particular. Fox Pitt also wrote BACK IN FEBRUARY they expected GS to have $2.7B Q1 write-downs.
Sounds to me they were pretty close!
So guess what? This writedown is OF NO SUPRISE to ANYONE! It was expected. And being that it is being reported in London that the writedown is only $3B, and NOT $6B or $10B will be of great RELIEF to many!