When a major executive leaves a firm, it is usually to go to another firm. However, in the case of Goldman Sachs (NYSE:GS), the path is to some higher calling, as seen yesterday when John Thain decided to leave as president of Goldman Sachs to become the CEO of the New York Stock Exchange (see Bill Mann's story about the move, Thain Takes Reins at NYSE).
Such a departure could be a significant blow to a company, but this is not the case with Goldman Sachs. The firm has a deep bench and will replace Thain with the trading rock star, Vice Chairman Lloyd Blankfein.
Trading has been the godsend for Goldman Sachs, as Blankfein has led the firm's efforts in using its own capital to take smart bets. The environment has been ripe for this, with low interest rates and narrow credit spreads, as well as volatility in currency and commodities markets.
Coincidentally, Goldman also announced its quarterly results yesterday. Once again, the bulk of the company's growth came from the trading side.
The company posted net earnings of $971 million for the past quarter and $3.01 billion for the past 12 months. Its trading division -- known as Fixed Income, Currency, and Commodities (FICC) -- generated net revenues of $1.14 billion, which was a 36% increase from the same period a year ago.
Despite the significant cash flows, Goldman Sachs appears to be resistant to hiking its dividend. In fact, the company sees a "pickup in transactions across the board, both merger transactions as well as equity transactions," said CFO David Vinair on the conference call.
In other words, looking into the crystal ball, Goldman Sachs see higher-yielding places to put company cash. And, no doubt, a comeback in corporate finance transactions will be highly beneficial for Goldman, as well as the other big bankers, such as Morgan Stanley (NYSE:MWD), Bear Stearns (NYSE:BSC), and Lehman Brothers (NYSE:LEH), all of which posted strong numbers recently.
See what Fools are saying about Goldman Sachs' recent earnings and executive news on the Goldman Sachs discussion board. Tom Taulli is a professor of finance at the USC School of Business (don't worry, but he does come out of his ivory tower). You can reach him at [email protected].
