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Goldman Reportedly Planning Staff Cutbacks

October 05, 1994|From Bloomberg Business News

NEW YORK — Goldman, Sachs & Co. is considering cutting 5% or more of its staff in the next several weeks amid declining profit, a source close to the firm said.

The nation's largest investment banking partnership may pare more than 400 of its 9,200 jobs, said the insider, who did not want to be named.

Reports of Goldman's possible cuts come three weeks after Chairman Stephen Friedman said he would step down at the end of November, when the firm's fiscal year ends. He will be replaced by Jon Corzine, co-head of the firm's fixed-income division.

The bulk of the cuts are expected to come from support staff and fixed-income operations, Associated Press reported. Goldman, one of the most profitable firms on Wall Street, is considering the cutbacks during year-end performance reviews.

"Fixed income is the major line of business these days," said John Keefe, an independent analyst who follows Wall Street. "It makes sense that is going to be the first thing to expand and contract."

Wall Street profits are suffering their worst decline since 1990 because the end of the three-year bond rally caused trading profits and underwriting fees to disappear.

Firms such as Merrill Lynch & Co., Lehman Bros. Holdings Inc., CS First Boston and PaineWebber Group Inc. have dismissed employees because of declining business. General Electric Co.'s Kidder, Peabody & Co. unit is expected to announce hundreds of job cuts as early as this week.

Goldman earned $446 million in the first half of fiscal 1994, a decline of 68% from a year earlier, according to Moody's Investors Service Inc. Profit in the second quarter ended May 27 fell 91% to $64 million.

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