Goldman Beats Expectations

GOLDMAN BEATS EXPECTATIONS  |  Goldman Sachs may be getting its groove back. The Wall Street firm said on Tuesday that it swung to a profit in the third quarter, reporting net earnings applicable to common shareholders of $1.46 billion, compared with a loss of $428 million in the quarter a year ago. The third-quarter profit amounted to $2.85 a share, beating the $2.12 a share analysts were expecting. Goldman also said it was increasing its dividend to 50 cents from 46 cents. (The conference call to discuss the results is at 9:30 a.m. Dial 1-888-281-7154 to listen in the United States.)

One risk still looms for Goldman, as a new book by a former employee, Greg Smith, is set to be released next week. But judging by the first chapter, it is not entirely clear what dirt Mr. Smith might reveal in “Why I Left Goldman Sachs,” DealBook's Susanne Craig writes. Mr. Smi th illustrates Goldman's famously competitive culture with anecdotes about folding stools and a Cheddar cheese salad. The other chapters, with titles like “Welcome to the Casino” and “Monstrosities,” may prove more embarrassing for the firm, Ms. Craig notes.

Goldman added a new board member on Monday, naming Adebayo O. Ogunlesi as an independent director. Mr. Ogunlesi, a well-known Wall Street figure who once said he did not fit the mold of a typical investment banker, runs Global Infrastructure Partners, a private equity firm that recently raised a $8.25 billion fund.

Over all, it has been a year of retrenching in the financial industry, and the cutbacks have had an effect on New York City's economy. The City Room blog writes that smaller bonuses on Wall Street were “the main reason Manhattan was the only large county in the country to record a decline in wages in the latest 12-month period for which figures are available, according to the federal Bure au of Labor Statistics in New York.”

 

THE BAILOUT BLUES  |  Jamie Dimon was hailed as the King of Wall Street when JPMorgan Chase bought Bear Stearns in March 2008 in a government-brokered deal. But he has lately been having second thoughts about Bear, which is the target of a new lawsuit filed by New York's attorney general. Andrew Ross Sorkin writes in the DealBook column: “Whether you love or hate Wall Street, whether you want bankers to go to jail or not, the recent series of suits brought by the government may have a profound impact on how businesses react to being asked to provide assistance when the next financial crisis arrives. Chances are, they won't.”

 

AN INSIDER'S PLAN TO LIMIT BANK SIZE  |  Daniel K. Tarullo, a Federal Reserve governor, made a splash last week when he urged Congress to consider limiting the size of banks' balance sheets. DealBook's Peter Eavis writes that lawmakers on both sides of the aisle may warm to that idea. “I am completely open to the proposal because of my similar concern about the growing size of institutions that are too big to fail,” said Senator David Vitter, a Republican of Louisiana. “Beyond this specific proposal, there is a growing nonpartisan consensus to do a lot more to limit the size of the megabanks.”

 

ON THE AGENDA  |  Mitt Romney and President Obama meet Tuesday night in the second presidential debate. Mr. Romney, the Republican candidate, has cultivated some well-placed friends on Wall Street, who held a fund-raising event Monday evening, DealBook's Peter Lattman reports. The event's nearly 200 co-chairs included John Paulson of Paulson & Company and Josh Harris and Marc Rowan, the co-founders of Apollo Global Management. Another host, Paul E. Singer of Elliott Management, recently donated $250,000 to support same-sex marriage in Maryland, Politico reports.

Stephen Siderow, co-founder of the hedge fund BlueMountain Capital, is on Bloomberg TV at 1 p.m. Justin Rosenstein, who works with Dustin Moskovitz at the start-up Asana, is on Bloomberg TV at 6 p.m. Coca-Cola, Johnson & Johnson, State Street and UnitedHealth report earnings before the bell. In London, Bloomberg Link hosts a conference on currency markets. The Consumer Price Index for September is out at 8:30 a.m., and data on industrial production for September comes out at 9:15 a.m.

 

SOFTBANK'S BIG GAMBLE  |  With a $20.1 billion deal to take control of Sprint, SoftBank of Japan is “making a risky wager that it can break the dominance of Verizon and AT&T in the United States the way it did a similar duopoly that long reigned over the Japanese market,” DealBook's Michael J. de la Merced writes. But SoftBank's investors may be concerned that the chief executive, Masayoshi Son, is letting his ego guide his thinking, The Wall Street Journal's Heard on the Street column writes. Mr. Son said on Monday, “Every man wants to be No. 1.” Still, SoftBank's shares rebounded on Tuesday, climbing 9.5 percent, after two days of declines.

The deal strengthens Sprint, expanding its customer base and giving it more purchasing power, DealBook notes. But it raises questions about another wireless company, Clearwire, which is seen as a potential takeover target in the future. Clearwire's shares were up nearly 16 percent on Tuesday.

 

YAHOO'S NEW C.O.O.  |  Marissa Mayer, who is back at Yahoo after a two-week maternity leave, announced on Monday that she had hired Henrique De Castro, a vice president at Google, to be Yahoo's chief operating officer. Mr. De Castro's compensation will include a $600,000 base salary plus a bonus that could be twice that much, the Bits blog writes.

 

 

 

Mergers & Acquisitions '

How the BlackBerry Lost Its Cool  |  Research in Motion is confronted by a growing number of consumers who say they feel “ashamed” of their BlackBerry devices. NEW YORK TIMES

 

Rothschild Resigns from Board of Mining Company  |  The British financier Nathaniel Rothschild said he regretted having partnered with the Bakrie family, an Indonesian dynastic clan that helped him build the London-listed mining company Bumi. DealBook '

 

CNH Rejects Merger Deal From Fiat Industrial  |  Fiat Industrial, which manufactures capital goods like trucks and commercial vehicles, had hoped the deal would allow it to obtain a listing in the United States. DealBook '

 

When the C.F.O. Isn't Wanted on the Board  |  The Wall Street Journal writes: “Chief financial officers serving as directors at their own companies are a dying breed, thanks to a push for greater board independence.” WALL STREET JOURNAL

 

Flynt to Buy a Movie Distributor  |  Larry Flynt, the adult entertainment mogul, is paying about $33 million for New Frontier Media, which offers pay-per-view adult programming. WALL STREET JOURNAL

 

INVESTMENT BANKING '

S.&P. Downgrades Big Spanish Banks  |  Banco Santander and B.B.V.A., along with nine other Spanish banks, had their ratings cut by Standard & Poor's. BLOOMBERG NEWS

 

Spain Said to Consider Asking for Credit Line From Europe  | 
WALL STREET JOURNAL

 

Citigroup in the Shadows  |  Bloomberg News writes that Vikram S. Pandit of Citigroup “is among the most vocal critics of shadow banking, the lightly regulated lending that can mask risk in the financial system. He's also among the kings of the business.” BLOOMBERG NEWS

 

Bank of America Hires Chairman of China Operations  |  Margaret Ren, an investment banker who is a daughter-in-law of a former Chinese premier, has connections in China that could help her in her new role, The Wall Street Journal notes. WALL STREET JOURNAL  |  REUTERS

 

Iranian Hackers Blamed for Cyberattacks on Banks  | 
WALL STREET JOURNAL

 

A Banker's Experience on Bath Salts  |  According to a recording released by the Los Angeles police union, a Deutsche Bank executive claimed to have ingested so-called bath salts stimulants at the time of an incident in May, The Los Angeles Times reports. LOS ANGELES TIMES

 

PRIVATE EQUITY '

A Lack of Private Equity Opportunities in China  |  The Wall Street Journal reports: “China's private equity investors are finding fewer opportunities and smaller returns compared to even four years ago.” WALL STREET JOURNAL

 

Snack Company Yields a Tasty Profit  |  The private equity firm VMG Partners made a return of more than eight times on its investment in Snack Factory, which it sold for $340 million to another company, The Wall Street Journal reports. WALL STREET JOURNAL

 

AXA Private Equity Adds New York Executive to Its Board  | 
REUTERS

 

HEDGE FUNDS '

Funds Focused on Emerging Markets Stand Out  |  Hedge funds focused on emerging markets have had gains of nearly 8 percent this year, compared with about 5 percent for a typical hedge fund, according to Reuters. REUTERS

 

Financial Advisers and the New Hedge Fund Ad Rules  |  After hedge funds are able to promote their businesses more freely, some financial advisers could “face pressure from investors attracted to altern ative investments they see marketed in glossy magazine ads or on television,” The Wall Street Journal writes. WALL STREET JOURNAL

 

I.P.O./OFFERINGS '

Telefonica Sets Terms for I.P.O. of German Unit  |  The Spanish telecommunications giant Telefónica, which is seeking to reduce its heavy debt load, says it will raise around $2 billion through an initial public offering of its German business. DealBook '

 

Fosun Pharmaceutical Said to Plan Hong Kong I.P.O.  |  The company, which is said to be aiming to raise up to $591 million, would be the “first significant new listing since July in the Hong Kong market,” The Wall Street Journal reports. W ALL STREET JOURNAL

 

VENTURE CAPITAL '

The V.C. Deal That Got Away  |  Norwest Venture Partners, which turned down an opportunity to invest in Workday, “has got to be kicking itself,” Fortune's Dan Primack writes. FORTUNE

 

Start-Up Aims to Make TV More Interactive  |  Viggle, a start-up based in New York, “hopes to become the entertainment industry's chief loyalty-rewards program,” Fortune writes. FORTUNE

 

LEGAL/REGULATORY '

New York Fed Turns Over New Libor Documents  |  The Federal Reserve Bank of New York turned over nearly 6,000 pages to a House subcommittee that is examining whether the regulator had turned a blind eye to Libor rate-rigging during the financial crisis. DealBook '

 

Homeowners Sue Banks Over Libor Manipulation  | 
BLOOMBERG NEWS

 

Fed Official on the Shortcomings of Monetary Policy  |  William C. Dudley, president of the Federal Reserve Bank of New York, spoke on Tuesday about the central bank's policy before the recent expansion of its stimulus: “With the benefit of hindsight, monetary policy needed to be still more aggressive.” NEW YORK TIMES ECONOMIX

 

Nomura Is Fined $3.8 Million for Leaking Info rmation  | 
BLOOMBERG NEWS

 

Tax Proposal in Mongolia Threatens Rio Tinto Project  |  Mongolia's new government is in the process of passing a 2013 budget whose draft proposal includes increasing taxes and royalties by $300 million on a huge copper mine. If Rio Tinto seeks international arbitration to resolve the issue, it could delay the start date for the mine. DealBook '

 

American Politics and Chinese Data  |  In the midst of increasingly heated election rhetoric about China, Beijing has released some important economic data as its currency reached record highs, Bill Bishop writes in the China Insider column. What DealBook readers need to know about China this week. DealBook '

 

Financier Behind ‘Rebecca' Is Arrested  |  Mark C. Hotton, a stockbroker who is accused of defrauding the producers of the Broadway musical “Rebecca,” was arrested on Monday, The New York Times reports. NEW YORK TIMES

 

Law Firm for UBS Whistle-Blower Seeks Share of Award  | 
BLOOMBERG NEWS