Wednesday, April 15, 2009

Goldman’s missing month …

Floyd Norris of the New York Times has an astute observation:

“Goldman Sachs reported a profit of $1.8 billion in the first quarter, and plans to sell $5 billion in stock and get out of the government’s clutches, if it can.

How did it do that? One way was to hide a lot of losses in not-so-plain sight.

Goldman’s 2008 fiscal year ended Nov. 30. This year the company is switching to a calendar year. The leaves December as an orphan month, one that will be largely ignored. In Goldman’s earnings statement, and in most of the news reports, the quarter ended March 31 is compared to the quarter last year that ended in February.

The orphan month featured — surprise — lots of write-offs. The pretax loss was $1.3 billion, and the after-tax loss was $780 million.

Would the firm have had a profit if it had stuck to its old calendar, and had to include December and exclude March?”


Hasbullah Pit said...

"Goldman Sachs reported a profit of $1.8 billion in the first quarter, ...."

And plan to distribute bonus?

Anonymous said...

Bankers are brilliant. Always trust them to find some accounting loophole or get out of any sticky regulations. What's the SEC doing about this?