Fueled by public perceptions of their 2009 earnings, Morgan Stanley (MS) and Goldman Sachs Group Inc. (GS) are carefully timing their respective releases.
Goldman, anticipating intense public scorn and scrutiny over its projected bonus pool, would like to report as close to Morgan Stanley as possible to try to deflect some attention from the bonuses and highlight the differences between its highly profitable year and Morgan’s lackluster results.
For its part, Morgan would prefer to avoid comparisons.
Firms typically pick different days to report so analysts have more time to digest the data. In fact, Goldman and Morgan have reported on the same day only a handful of times during the past 10 years. Over the past few years, Goldman has typically reported a week or so before Morgan.
The change was no accident, according to people close to Goldman.
Analysts are predicting Morgan Stanley will post a profit of $526 million in the fourth quarter as it grapples with fallout from the mortgage crisis.
Goldman is having one of its best years in history. Analysts polled by Thomson Reuters expect the firm to post a profit nearly six times that of Morgan, or about $2.9 billion.
Goldman’s date-change agitated people inside Morgan Stanley, according to people familiar with the matter. In a countermove, Morgan said on Jan. 8 it was bumping up its call one day, to Wednesday, Jan. 20.
Morgan Stanley said it moved the announcement not to distance itself from Goldman. Rather, it needed to accommodate the schedule of James Gorman, its incoming chief executive, a spokeswoman said, who wasn’t available on Jan. 21.
Typically earnings calls are handling by the chief financial officer, but Mr. Gorman was keen to participate in his first call as chief executive, said the spokeswoman. Morgan wouldn’t comment on Mr. Gorman’s schedule on Jan. 21.
This isn’t the first time Goldman has been caught in a hubbub over earnings announcements. Firms that are first out of the gate with strong earnings sometimes get a nice stock bump, as Goldman did in the first quarter of 2006, when its earnings beat analyst expectations by more than 50%.
A day later, Lehman Brothers Holdings Inc. reported its earnings, but in beating analyst expectations by just 15%, failed to move investors. Its stock actually sank that day.
Lehman changed its strategy the next quarter, moving its earnings date at the last minute so that it could report ahead of Goldman. The move was for naught, however. Lehman’s stock sank anyway.
However, any perceived effort to manipulate their stock price may add to the public outcry against Goldman who received over $12.9 billion when AIG was bailed out by the U.S. government.
And, critics claim, their anticipated large profits were heightened by betting against mortgage bonds the investment bank put together.
