Big job cut predicted for Goldman Sachs

Merrill analyst notes failure to meet goal of keeping rolls unchanged

November 24, 2001|By BLOOMBERG NEWS

NEW YORK - Goldman Sachs Group Inc., the biggest mergers-advisory firm, will have to cut about 1,000 jobs because it hasn't met its goal of keeping total employment unchanged from a year ago, Merrill Lynch & Co. analyst Judah Kraushaar said.

"We would not be surprised to see upwards of a 1,000-person cutback," Kraushaar said in a research note yesterday. Such a reduction would equal about 4.2 percent of its work force.

Goldman is trying to hold employment levels steady from last year even as other investment banks slash their staffs to stop a slide in earnings. Securities firms have fired about 27,000 workers this year, including Merrill, Kraushaar's employer. Merrill has eliminated 6,100 jobs in the first three quarters, and is reducing its work force by thousands more.

"We continue to recruit" and, "to keep our headcount flat, some people have left and some people have been asked to leave," said Peter Rose, a Goldman spokesman.

Goldman had 23,494 employees at the end of the third quarter. That's 867 more than at the start of the year.

Kraushaar dropped his fourth-quarter earnings estimate for Goldmanto $1 a share from $1.09 to account for the expected cost of severance.

So far this year, Goldman is the top mergers adviser, helping arrange $480 billion of acquisitions this year. The average estimate of 15 analysts who follow the company expect Goldman to earn 88 cents in the fourth quarter, according to Thomson Financial/First Call.

Rose declined to say how many people will be fired before Nov. 30, the end of the company's fiscal year, or how many people have already been dismissed this quarter.

The firm this week sacked 15 equity traders, according to people familiar with the situation. The company eliminated 50 employees in its research department last week. In October, it cut at least 50 European investment bankers.

Goldman's fiscal third-quarter earnings plunged 43 percent to $468 million. Revenue from investment banking slid 17 percent to $1.1 billion, as underwriting fees declined 28 percent. Its shares rose $2, or more than 2 percent, yesterday to close at $90.15. The shares are down 15 percent this year.

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