Goldman Sachs Sliding on Weak Revenue

Updated from 5 a.m. EDT.

Goldman Sachs (GS) shares were sliding Tuesday morning after the firm beat profit expectations, but posted weaker-than-expected third-quarter revenue.

Goldman Sachs earned $1.81 a diluted share on net revenue of $6.04 billion for the quarter ended Aug. 31, vs. $6.13 a diluted share on revenue of $845 billion in the year-ago period. Analysts polled by Thomson Reuters had expected a profit of $1.73 a share on revenue of $6.23 billion.

"This was a challenging quarter as we saw a marked decrease in client activity and declining asset valuations," Chairman and CEO Lloyd Blankfein said in a company statement. "Despite the deteriorating market conditions, the focus of our people and strength and breadth of our client franchise produced a solid performance in a tough environment. We remain well-positioned to meet the needs of our clients and identify and act on the right market opportunities."

Goldman shares were falling 12.5% to $118.55 after the opening bell.

Goldman, who along with Morgan Stanley (MS) will be the only major independent broker-dealer in the wake of major rivals like Lehman Brothers (LEH) collapsing or selling themselves amid to avoid a similar fate, has shown a Teflon quality in the during the year-long credit crunch, somehow posting strong profits and defying tempered expectations.

"Business in a word has been 'lousy' in the third fiscal quarter," writes Richard Bove, an analyst at Ladenburg Thalmann. "There has been no vitality in the investment banking sector. Trading activity has suffered in virtually every area. Private equity activity has been weak. The credit derivatives market has slowed. Prime brokerage is not doing well. Retail commissions are suffering."