Goldman Sachs says layoffs imminent
We all knew this was coming. We just didn't know when. Goldman Sachs' lousy second-quarter earnings, the biggest downside earnings surprise for the gilded bank in recent memory, has forced its hand on job cuts.
Goldman Sachs has announced it will lay off 1,000 employees soon, a not insignificant cutback. Goldman Sachs employed 35,500 people at the end of June, up 100 people from the prior quarter. The cuts are part of an effort to save $1.2 billion annually. Chief Financial Officer David Viniar discussed the job cuts with analysts after the earnings press release was issued.
According to Bloomberg, the job cuts will be broad based and affect junior and senior employees. Growth countries--particularly those in the BRIC block--will likely not be affected. This is a tough situation for managers, most of whom will be asked to pare down employees. It's hard to stay focused in this sort of an atmosphere.
One question here is whether Goldman Sachs will be acting alone. JPMorgan and Citigroup beat expectations, and that might have prevented mass layoffs. Bank of America hit expectations. Morgan Stanley's earnings are upcoming. If you had to point to one culprit, it would have to be Goldman Sachs' FICC trading machine, which stalled out a bit in the second quarter. You have to wonder if sales and trading teams will take some large hits. You would expect the investment banking side to be much safer, though managers might take the moment to reduce their ranks of poor performers.
- here's the article