Goldman Earnings Drop as Trading Slows

(Updated story with comments from Goldman Sachs conference call and to correct erroneous net earnings figure.)

NEW YORK ( TheStreet) -- Goldman Sachs' ( GS) 2010 earnings fell 61% from a record-breaking 2009 as trading activity slowed.

Goldman CFO David Viniar said during a call with analysts and investors Wednesday that "external events" such as concerns over European sovereign debt, the possibility of inflation in the U.S. and new regulations caused clients to take fewer risks.

"It was not a year anyone felt confident prices were going up. That caused a lot of people to sit on the sidelines," Viniar said.

Goldman posted net earnings of $2.39 billion or $3.79 per share on revenue of $8.64 billion, according to its fourth-quarter earnings report released Wednesday.

That compares to $8.20 per share in the fourth quarter of 2009 and EPS of $2.98 in the third quarter of 2010. Analysts surveyed by Thomson Reuters had been looking for Goldman to earn $3.76 per share in the fourth quarter of 2010.

For all of 2010, Goldman earned $8.35 billion, or $13.18 per share, vs. $22.13 per share in 2009. Compensation and benefits costs dropped 5% from 2009 to $15.38 billion.

Quarterly revenue was lower across many business segments, including equities and fixed income trading and investment banking.

Investment management revenue was the exception, rising 14% vs.the fourth quarter of 2009 and 18% vs. the third quarter on 2010. Investment banking revenue, which had been expected to be stronger, was 30% higher sequentially but down 10% vs. the fourth quarter of 2009.

Net revenue in fixed income currencies and commodities, the firm's largest trading division, fell 37% vs. what Goldman called "a particularly strong 2009."

-- Written by Dan Freed in New York.

Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.

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