Brokers post mixed results

June 19, 2001 Posted: 1423 GMT

NEW YORK (CNNfn) -- Lehman Brothers Holdings Inc. posted unexpectedly strong results for its fiscal second quarter Tuesday, overcoming a slowdown in investment banking, while Goldman Sachs Group Inc. saw sharply lower earnings and A.G. Edwards Sons Inc. missed the profit target for the period.

Lehman Brothers (LEH: up $4.56 to $71.86, Research, Estimates) said it earned $387 million, or $1.38 a diluted share, in the period, just below the $1.39 a share it earned a year earlier. Excluding results of a special participating preferred dividend, earnings increased to $437 million, or $1.57 a diluted share, in the most recent quarter, although earnings tracker First Call said the $1.38 EPS figure is the one that compares to forecasts.

"Despite continued difficult markets, resulting in an industry-wide slowdown in some investment banking activities, the second quarter proved to be among our best ever in terms of net income and revenues," Lehman CEO Richard Fuld Jr. said.

Lehman's investment banking revenue gained 18 percent to $565 million, helping to lift net revenue, which reflects revenue less interest expense, by 15 percent to $2.0 billion from $1.8 billion a year earlier.

Goldman Sachs (GS: up $1.50 to $90.15, Research, Estimates) earned $577 million, or $1.06 a diluted share, in its second fiscal quarter, ended May 25. That was in line with First Call's forecast but well off the $755 million, or $1.48 a share, it earned on the same basis a year earlier.

Goldman said that, excluding amortization of goodwill and other intangible assets, earnings per share fell to $1.13 from $1.49 a year earlier, but First Call said the $1.06 EPS is the proper comparison to forecasts.

Revenue from investment banking, its key revenue producer a year ago, fell more than half to $784 million from $1.59 billion a year earlier.

But the company said it still is the largest investment banking firm, ranking first in global public stock offerings, and announced and completed merger transactions. Revenue from trading and principal investments as well as from asset management and security services rose by about a third from year-earlier levels. That left net revenue at $3.99 billion, only a 4 percent decline from a year earlier.

A.G. Edwards (AGE: up $0.55 to $43.80, Research, Estimates) said its fiscal first-quarter profit fell 58 percent as commissions from its main stock brokerage operations fell sharply.

St. Louis-based A.G. Edwards said net profits for the quarter ended May 31 fell to $45.3 million, or 56 cents per share. First Call's forecast was for 61 cents. The company earned $107.3 million, or $1.24 a share, in the year-ago quarter.

The company was the subject of takeover rumors last week.

Overall revenues for the quarter fell to $606 million from $787 million a year earlier.

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