Goldman Sachs in 2004
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Case Code : FINA001
Case Length : 11 Pages
Period : 1997 - 2004
Pub. Date : 2005
Teaching Note :Not Available
Organization : Goldman Sachs
Industry : Banking
Countries : USA
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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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.
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...