Goldman Sachs in 2004
| Case Code: FINA001 Case Length: 11 Pages Period: 1997 - 2004 Pub Date: 2005 Teaching Note: Not Available |
Price: Rs.300 Organization: Goldman Sachs Industry: Banking Countries: USA Themes: - |
Abstract Case Intro 1 Excerpts
Introduction
Goldman Sachs, one of Wall Street's oldest and most well known investment banks, had been around for 135 years. In 2004, despite being dwarfed by competitors like Citigroup and CSFB (Its market capitalization of $42 billion in mid-2004 was roughly one-sixth that of Citigroup's $238 billion), Goldman maintained its solid reputation. Notwithstanding the weak economy and the slump in investment banking, Goldman had continued to perform impressively. Since 1996, the firm's equity base had grown at an average annual rate of 22%, while revenues had grown at almost 15%.
Goldman's return on equity was well above 20%. In the first quarter of 2004, it had its most profitable quarter ever, earning almost $2 billion before taxes. In 2003, Goldman recorded sales of $23 billion and a net profit of $ 3 billion. A private partnership for 130 years, Goldman had been a public company for only the last five years. The firm's revenue model was not clear to many investors. Goldman had been accused of giving special IPO allocations to key clients in exchange for investment banking business. The firm was fined $50 million as part of a far-reaching settlement involving conflict-of-interest allegations. Goldman was also ordered to pay $60 million to provide independent research and education to investors. When the regulatory scrutiny turned to the mutual fund industry, Goldman was again one of several investment and brokerage firms investigated for possible trading abuses...
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