Goldman and Morgan Stanley Q4 may be "ugly": analyst

Reuters
Wednesday, Dec 03, 2008

The fourth quarter will prove to be "ugly" for Goldman Sachs Group Inc and Morgan Stanley with meaningful write-downs as markets continue to be challenging, an analyst at J.P. Morgan Securities said.

Goldman may post a huge loss of $5.14 a share for the quarter, while Morgan Stanley is likely to report a loss of 46 cents a share, analyst Kenneth Worthington said.

Worthington was the latest among Wall Street analysts to turn more downbeat on Goldman Sachs and Morgan Stanley.

For the quarter, he expects gross write-downs of about $3.5 billion at Goldman Sachs and about $5.5 billion at Morgan Stanley.

Morgan Stanley, however, will benefit by about $4 billion due to the spread widening on its own debt, he said. This is more than the $0.5 billion benefit the analyst expects at Goldman.

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Goldman has been widely expected to post its first quarterly loss since going public in 1999. Poor market conditions got even worse last month as the U.S. Treasury abandoned its proposal to buy hard-to-trade mortgage securities and other debt from hard-hit banks.

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