Goldman Sachs Profit Fell 21 Percent, So Why Is Lloyd Still ‘Pleased’?

Lloyd Blankfein, chairman and chief executive officer of Goldman Sachs Group Inc., listens during a speech at the CARE conference in Washington, D.C., U.S., on Wednesday, March 9, 2011. Blankfein agreed to be a prosecution witness in Galleon Group LLC co-founder Raj Rajaratnam's insider trading trial this week, said a person briefed on the matter. Photographer: Andrew Harrer/Bloomberg via Getty Images Photo: Bloomberg/2011 Bloomberg

Goldman Sachs released its first-quarter earnings report today. Profit fell 21 percent year-over-year from $3.46 billion to $2.74 billion. On a per-share basis, including preferred dividends, quarterly profit fell from $5.59 a share to $1.56 a share. Not the kind of numbers you'd expect to precede a statement like this:

“We are pleased with our first quarter results,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “Generally improving market and economic conditions, coupled with our strong client franchise, produced solid results. Looking ahead, we continue to see encouraging indications for economic activity globally.”

What gives? Well, for one, Goldman beat analysts' predicted estimates for the dip in revenue. Secondly, revenues for fixed-income trading, one of Lloyd's preferred ways of making billions, more than doubled after a weak fourth quarter. But mostly, we imagine, it is because a big reason for the drop was a $1.64 billion preferred dividend payment to Berkshire Hathaway. The payout was related to that $5 billion infusion of confidence Warren Buffett gave Goldman during the financial crisis back when, as Lloyd has testified, "It seemed to be a consensus, an agreement, that we were making money at that point, when in fact, we weren't." You'd be pleased, too, if the full story on how badly you needed the handout didn't come out until years later.

Goldman profit falls after preferred dividend [MarketWatch]
Goldman Sachs First-Quarter Profit Tops Analysts’ Estimates [Bloomberg]
Lloyd Blankfein, Analysts “Pleased” With Goldman’s First-Quarter Results [Dealbreaker]