By Anirban Sen and Elizabeth Dilts Marshall
(Reuters) – Goldman Sachs Group Inc reported a bigger-than-expected fall in quarterly profit on Wednesday as the Wall Street bank set aside more money to cover legal costs for the 1MDB corruption scandal, overshadowing a rebound in its trading business.
The bank set aside $1.09 billion in the fourth quarter ahead of an expected settlement that could touch $2 billion or more. Goldman’s full-year earnings took a hit of $3.16 per share from the provision.
The legal woes come at a time when Chief Executive Officer David Solomon is launching a major shift in strategy away from trading – long its main profit engine – to the construction of a bigger consumer business that shields it from wild swings on financial markets.
Earlier in January, Goldman reshuffled most of its major reporting lines and, for the first time, unveiled the size of its consumer business, responding to long-standing requests for more transparency from analysts and investors.
Last week, the bank unveiled the size of its consumer business for the first time. The unit, which includes the online retail bank, Marcus, as well as its credit card business, reported a 23% jump in revenue to $228 million during the fourth quarter.
Rivals JP Morgan Chase & Co, Citigroup and Bank of America boast of much larger consumer businesses.
“Overall, the provision missed and comp ratio was higher than expected, so results look weak this quarter excluding the equity investment gains,” said analysts at Keefe, Bruyette & Woods in a note to clients.
Despite a slump in profit, the bank posted robust revenue growth as three of its four main reporting lines performed strongly.
Revenue from global markets, which houses the trading business, jumped 33% to $3.48 billion, thanks partly to easier comparisons from a year earlier when financial markets were roiled by uncertainty related to trade and global growth.
Bond trading surged 63% to $1.77 billion.
The strong performance from trading mirrored similar trend at other major rivals – JPMorgan Chase , Citigroup and Bank of America .
The only sore spot for Goldman during the quarter was investment banking, where revenue fell 6% to $2.06 billion, hurt by lower M&A advisory fees, as well as a slowdown in corporate lending.
The bank’s net earnings applicable to common shareholders fell to $1.72 billion in the quarter ended Dec. 31 from $2.32 billion a year earlier. Earnings per share fell to $4.69 from $6.04.
Analysts on average had expected earnings of $5.47 per share, according to the IBES estimate from Refinitiv.
Operating expenses jumped 42% to $7.3 billion.
Total net revenue, however, jumped 23% to $9.96 billion.
(Reporting by Anirban Sen in Bangalore and Elizabeth Dilts in New York; Editing by Anil D’Silva)
Investment firm head joins Algoma Steel's board – Sault Star
The president and chief executive officer of a New York-based investment firm is a new Algoma Steel board member.
Eric Rosenfeld founded Crescendo Partners in 1998.
He is a master of business administration graduate from Harvard University. Rosenfeld also serves on the boards of Primo Water Corp., CPI Aerostructures, Aecon Group and Pangaea Logistics Solutions, a release says.
He has served on boards since 1998. His first directorship was with Spar Aerospace, the company that developed the Canadarm used in space flights. Rosenfeld also served on the board of beverage maker Cott Corp.
He headed the arbitrage department of Oppenheimer & Co., an investment and brokerage bank, for 14 years before establishing Crescendo Partners.
Mary Anne Bueschkens, Gale Rubenstein, James Gouin, David Sgro, Brian Pratt and Rosenfeld join chair Andrew Harshaw, Andrew Schultz and Michael McQuade, a release says.
“ Our new board members bring critical expertise and diversity to the team,” said McQuade.
The other new members have backgrounds in the automotive, legal and construction sectors.
Bueschkens is a lawyer who has held various roles, including president and CEO of ABC Technologies, an automotive parts supplier.
Rubenstein is a partner in the Toronto-based law firm Goodmans LLP. She is counsel in the firm’s corporate restructuring group.
Gouin is a former head of Tower International, a global manufacturer of automotive products. He also worked 28 years at Ford Motor Company. He held two vice-president roles with the automaker.
Sgro is a senior managing director at Crescendo Partners. The firm’s services include consulting, mergers, acquisitions and capital raising support and private equity investment.
Pratt is a former chair and director of Primoris Services Corp., a parent company of construction and engineering firms. He was also president and chief executive officer and board chair of the Dallas-based Primoris, and its predecessor entity, ARB Inc., from 1983 to 2015. Pratt is a former chair of Legato Merger Corp.
All the board members are independent, except McQuade. He is ASI’s CEO.
The Sault Ste. Marie steelmaker started trading on the Toronto Stock Exchange on Thursday.
– with files from Postmedia Network
Micron Urges Government Investment with R&D Spend – The Next Platform
Over the last twenty years, memory has risen from 10% of the semiconductor market to almost 30%, a trend that is expected to continue, propelled by compute at the edge all the way up to datacenter. To meet these demands, memory giant, Micron, has announced it will make $150 billion in internal investments, ranging from manufacturing and fab facilities to R&D to support new materials and memory technologies.
The nature of the announcement serves two purposes. The first is obvious, Micron is putting a stake in the ground around its bullish view for edge to datacenter growth and their role as a primary component maker. The second is only slightly less obvious: to compel the U.S. to match funds or continue new investment strategies to support U.S. fabs and semiconductor R&D.
While $150 billion is a sizable investment, the fab component of Micron’s plans will gobble up a significant fraction. While no fab is created equally, consider TSMC’s investments in new facilities, which are upwards of $9 billion. Such investments can take two to three years to yield but the time is certainly right. Gartner, for instance, estimates the costs for leading-edge semiconductor facilities to increase between 7-10%.
While DRAM and NAND are less expensive than leading edge technologies, Micron will need to choose carefully as it sets its plans in motion. Luckily, there is ample government support building in the U.S. for all homegrown semiconductor industry, although it is unclear how federal investments, including the $52 billion CHIPS Act, will augment Micron’s own ambitions.
Micron is seeking the attention of government with its broad R&D and manufacturing investment, pointing to the creation of “tens of thousands” of new jobs and “significant economic growth.” In a statement, Micron explained that memory manufacturing costs are 35-45% higher than in lower-end semiconductor markets, “making funding to support new semiconductor manufacturing capacity and a refundable investment tax credit critical to potential expansion of U.S. manufacturing as part of Micron’s targeted investment.”
“The growth of the data economy is driving increased customer demand for memory and storage,” said Executive Vice President of Global Operations Manish Bhatia. “Leading-edge memory manufacturing at scale requires production of advanced semiconductor technology that is pushing the laws of physics, and our markets demand cost-competitive operations. Sustained government support is essential for Micron to ensure a resilient supply chain and reinforce technology leadership for the long term.”
Micron CEO, Sanjay Mehrotra says the company will “look forward to working with governments around the world, including in the U.S. where CHIPS funding and the FABS Act would open the door to new industry investments, as we consider sites to support future expansion.” The subtext there is that the U.S. is only one country in the running, among others making investments.
Increasing government support will likely align with fabs and facilities but Micron says it’s working on next generation technologies set to keep pace with growing demand.
This is part of the company’s 2030-era plan for memory technology. Micron sees edge and cloud deployments expanding but also points to AI as the leading workload across deployment types. The company’s senior VP and GM for Compute and Networking, former Intel HPC lead, Raj Hazra, says that by 2025, 75% of all organizations will have moved beyond the AI experimentation stage into production.
To support this more practically, Micron has set forth some ambitious near-term targets, including reaching for 40% improvements in memory densities over existing DRAM, double SSD read throughput speeds over current 1TB SSDs, 15% power reductions over existing DRAM and 15% better performance for mixed workloads over existing NAND.
Walmart allowing some shoppers to buy bitcoin at Coinstar kiosks
Coinstar, known for its machines that can exchange physical coins for cash, has partnered with digital currency exchange CoinMe to let customers buy bitcoin at some of its kiosks.
There are 200 Coinstar kiosks located inside Walmart stores across the United States that will allow customers to buy bitcoin, a Walmart spokesperson said.
Walmart was subject to a cryptocurrency hoax in September when a fake press release was published announcing a partnership between the world’s largest retailer and litecoin. The news had briefly sent prices of the little known cryptocurrency surging.
(Reporting by Uday Sampath in Bengaluru; Editing by Devika Syamnath)
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