Bear, Goldman take hits

In a sign that Wall Street's gravy train may be slowing, Bear Stearns Cos. said today that quarterly earnings dropped by a third, while Goldman Sachs Group Inc. reported a slight decline in revenues, according to Crain's New York Business. Bear's results were hurt by the growing difficulties for mortgage-backed securities, an area where Bear is a major underwriter and trader, and by a write-down of its floor-trading business at the New York Stock Exchange. Revenues in Bear's bond division fell by 16%, and for the second quarter the firm reported net income of $361 million, or $2.52 a share, on about $5 billion of revenue, compared with per-share earnings of $3.72 in the year-earlier period. The bad news from Bear comes after rival Lehman Brothers reported a 27% jump in second-quarter earnings, aided in large part by its growing equity business. Bear's stock fell about 2% in early trading today. Despite the drop in profits, some analysts were nonetheless pleased with Bear's results because they feared an even worse fall. "All in all, a solid quarter," said Bank of America analyst Michael Hecht in a research report to clients. At Goldman, profits grew in the second quarter, but only barely. The firm reported earnings of $2.33 billion, or $4.93 a share, on $10.18 billion of revenue, compared with per-share income of $4.78 in the year-earlier period on $10.24 billion of revenue. The firm also reported a big decline in bond revenues, but offset that with gains in other areas such as investment banking. Its shares also fell in morning trading.