Goldman readies for its close-up

Goldman readies for its close-up


NEW YORK (CNNMoney.com) -- Goldman Sachs is likely to report a gaudy profit for the first quarter on Tuesday morning. Analysts currently expect Goldman to earn $2.4 billion, up 44% from a year ago.

But even if Goldman blows those estimates out of the water, it may do little to lift the scrutiny the firm is now facing from the SEC over a security tied to subprime mortgages.


Before the Securities and Exchange Commission lodged fraud charges against the firm last Friday, investors had a lot of reasons to be hopeful about Goldman's latest results.

In the fourth quarter of 2009, Goldman earned $4.9 billion. Since then, the company has enjoyed a bounce from strengthening credit and currency markets and has issued a ton of new debt in recent months.

This may not matter so much to investors, however. In a nod to the increased scrutiny on Goldman following Friday's news, the company moved up the release of its results Tuesday morning as well as the accompanying investor conference call by a couple of hours.

David Viniar, the company's chief financial officer who typically staffs those meetings with little assistance from other members of Goldman's management committee, will be joined by Goldman's co-general counsel to address the SEC complaint, the company said Monday.


So far, Goldman has made it clear it has every intention of fighting back. In the wake of Friday's announcement, the firm called the charges "unfounded", adding that they planned to "vigorously contest" them.

In the event Goldman were found guilty or attempted to settle with regulators, analysts have suggested it won't have much trouble absorbing any monetary penalty.

Nor is it likely to dislodge Goldman Sachs (GS, Fortune 500) from its position as Wall Street's top firm.

Richard Bove, an analyst for Rochdale Securities that tracks the company, said in a note to clients Friday that he did not expect Goldman's trading partners or its corporate clients to abandon the firm.

"The company's presence, systems, capital and expertise in trading markets make it number one in the world in this activity," Bove wrote. "It cannot be easily replaced."

source: cnn.com