1 November 2012
Table of Contents
Company Organization and Structure-3
Institutional Client Services-3
Investing and Lending-4
Revenue, Expense, and Net Income-5
Return on Assets and Equity-7
Position in the Industry-8
Stock Market Performance-9
Corporate Level Strategy-12
Business Level Strategy-12
1 November 2012
Company Analysis and Prognosis: Goldman Sachs
I will provide an analysis of Goldman Sachs, using key industry metrics to compare it to industry standards and provide a five year prognosis. Furthermore I will present Goldman Sachs’ history and current structure and operations to develop my analysis. Goldman Sachs operates within a variety of financial activities, but primarily deals in the Securities Brokerage industry (NAICS 523111). This industry consists of companies who primarily act as agents/brokers between buyers and sellers of securities from a commission or transaction fee (BHB). This will provide the groundwork to conduct a SWOT analysis and hone in on what their current position is as a company and within their industry. I will then provide my prognosis of Goldman Sachs, including a 5 year projection of revenue, net income and other key industry metrics. The analysis provided, as well as historical trends within the industry will provide context for my prognosis. I am currently in the business school at the University of Kansas with prior industry analysis experience including: Miscellaneous financial Investment Activities (523999), Mobile Food Services (722330), and Supermarkets and Other Grocery (except Convenience) Stores (445110). I have spent over 15 hours in research to gather the necessary information for this analysis. The purpose of this paper is to demonstrate an understanding of concepts from class and an ability to apply them in a company analysis and prognosis. Background
Marcus Goldman founded Goldman Sachs as a small commercial paper deal in 1869 (WSJ). In 1896 the company listed on the New York Stock Exchange for the first time (FUN). During the 1920’s Goldman Sachs invested heavily and recklessly in the stock market. In 1929 Goldman Sachs suffered huge losses during the stock market collapse (WSJ). In 1930 Sidney Weinberg took over and built its investment banking segment (WSJ). In 1956 Goldman Sachs led the underwriting of Ford Motor Co.’s IPO (WSJ). In 1969 Gus Levy took over and built up its stock and bonds trading market (WSJ). In 1976 John Weinberg and John Whitehead took over the firm and continued to expand its investment banking business (WSJ). In 1990 Robert Rubin and Stephen Friedman took over and focused on expanding global operations and its mergers and acquisitions and advisory business (WSJ). In 1994 some partners fled the firm as bets on the bond market suffered big losses (WSJ). In 1999 Goldman Sachs became a major underwriter for various tech firms. During this major growth Goldman Sachs decided to go public later that year (WSJ). In December of 2007 Goldman Sachs reported record profits right before the housing and credit crisis (WSJ). In October of 2010 the United States government bought 10 billion dollars of preferred shares from Goldman Sachs as part of the TARP bailout (WSJ). In January of 2010 Goldman Sachs reported record profit of 13.39 billion following the recession of 2007-2009 (WSJ).
Goldman Sachs serves a variety of different entities from individuals to governments. Goldman Sachs believes it is their duty to commit resources to help clients, shareholders, and communities grow (GS). Goldman Sachs credits its people as being their greatest...