Cnn.com tells us the good news that “Goldman reports $1.8 billion profit,” but the totality of the information in the cnn.com article strikes me as mildly curious.
While announcing that “Goldman reports $1.8 billion profit,” the article points out that Goldman needed $10 B in TARP funds only a few months ago. Yet now Goldman is planning to sell stock in order to raise $5 B in order to pay down the TARP obligation. Further, Goldman reported earnings of $3.39 per share for the quarter ended March 31, which is more than double the earnings per share amount projected by analysts.
All of this together paints a picture that strikes me as mildly curious. I suppose the fact that Goldman took $10 B in TARP funds but is now, merely months later, parading $1.8 billion in quarterly profit could be chalked up to “short term liquidity problems.” But the analysts’ 100% miss on Goldman’s earnings per share is a pretty big miss given that usually banks offer enough guidance for the analysts to stay on the ball field.
Goldman’s plan to raise $5 B in a stock offering has me similarly ruminating, given that now would not have struck me as the ideal time for Goldman to tap the stock market for $5 B.
The whole situation harkens back to 1999, and I cannot help but wonder what Arthur Levitt might think of it.