Not So Good Friday For Goldman and Lehman

What if the other shoe drops but no one hears?

Standard & Poor’s analysts tested the tree-falling-in-an-empty-forest scenario, as it lowered the outlooks for Goldman Sachs and Lehman Brothers to negative while markets were closed.

Standard & Poor’s analysts Scott Sprinzen and Diane Hinton affirmed their AA-/A-1+ rating for Goldman Sachs Group (nyse: GS - news - people ) and A+/A-1 rating for Lehman Brothers Holdings (nyse: LEH - news - people ), pointing to strong underlying businesses and acceptable first-quarter earnings. But S&P also lowered the companies’ outlooks to “negative” from “stable” on expectations of 20%-to-30% drops in net sales after write-downs going forward.

The analysts also revised their outlook for the U.S. securities industry at large to “negative,” meaning there is a one-in-three chance that there will be a rating change in the next two years.

Goldman shares closed Thursday ahead by $13.14, or 7.9% , to $179.63 and Lehman stock added $6.42, or 15.2%, at $48.65.

Analysts, while acknowledging the Federal Reserve’s support for U.S. broker-dealers boosts confidence in capital markets, said negative outlooks for independent securities firms are appropriate since the potential for decreased profitability is still substantial.

The slashed outlook may be especially difficult for Lehman Brothers to stomach. The financial services firm, whose business mix most closely resembles that of virtually collapsed Bear Stearns (nyse: BSC - news - people ), has dismissed recent rumors that it’s headed down the same ditch as Bear (See: Financials Fall Into Bear Pit). Analyst Sprinzen says Lehman has done a better job managing its liquidity than Bear. As of Feb. 29, the firm’s excess liquidity structure was $34 billion.

“Lehman is among the largest proportionately of the U.S. broker-dealers, and its sources-to-uses ratio is the strongest of the five,” Sprinzen said, adding that earnings have held up and Lehman’s fixed income business remains profitable despite being directly affected by the economic slowdown and problematic asset-related write-downs.

Sprinzen called Goldman Sachs’ leftover mortgage and leveraged finance-related commitments “manageable” and praised the strength of its liquidity position.

“However … the firm’s emphasis on trading activities and its aggressive risk appetite leave it open to the possibility that major missteps could ultimately occur, leading to a change in investor sentiments,” Sprinzen said.

Although Goldman is the most profitable U.S. broker-dealer, Sprizen said last quarter’s profits were weak, with sales off 35% from the previous year.

Documents filed with the Securities and Exchange Commission on Thursday March 20 show that Goldman’s President and Co-Chief Operating Officer Jon Winkelried sold some 30,000 shares at about $173.85 each, totaling approximately $5.2 million, from Wednesday to Thursday. Vice Chairman Michael Sherwood unloaded some 7300 shares at a per share price of about $174.85, totaling close to $1.3 million Wednesday. Goldman could not be reached for comment

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Citigroup Laying Off 2,000 More

Citigroup Inc. plans to lay off an additional 2,000 employees from its markets and banking unit, and in this latest round of job cuts, senior investment-banking officials won’t be spared, according to two people with knowledge of the decision.

The latest round of job cuts at the New York-based bank brings its layoffs since the mortgage crisis began to more than 6,000, or about …

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Happy Holi !!!

Holi is one of the biggest festivals in India. It is not a festival of a religion or a caste . Infact on the contrary it celebrates the spirit of unity and oneness. It is a festival of colors…A celebration of all the beauties of Nature and Human Race.
So get off your seats, go out and ENJOY !!!

HOLI HAiiiiiiiiiiiiiiiiiiiiiiiiiiiiiii………..

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US bars multiple H-1B applications for same employee

Amidst demands for raising the cap on H-1B visas for skilled professional, authorities have issued a new rule prohibiting employers from filing more than one petition for a single employee in a fiscal year. The change is intended to promote a fair and systematic process for H-1B petitioners, the US Citizenship and Immigration Services (USCIS) said on Wednesday while announcing the new rule.

This rule ensures that companies filing H-1B petitions will have an equal chance to receive consideration for an H-1B worker. The current cap on new H-1B visas is 65,000 per fiscal year with a few exceptions. US businesses utilise the H-1B programme to employ foreign workers in fields that require theoretical and practical expertise in specialised occupations requiring a bachelor’s degree or higher (or its equivalent), such as scientists, engineers or computer programmers.

The first 20,000 H-1B petitions filed on behalf of foreigners with US-earned masters’ or higher degrees are exempt from the H-1B cap of 65,000. The USCIS administers a separate “20,000 cap” for such exempt petitions.

The USCIS said it would use a random selection process for all the master’s degree or higher cap-exempt cases received on the first five business days available for filing H-1B petitions for a given fiscal year, if necessary. If the US master’s exemption limit is reached on the first five business days, the USCIS will first conduct the random selection process for such petitions before it begins random selection for petitions to be counted towards the 65,000 cap.

Petitions eligible for the US master’s degree or higher exemption that are not selected to receive an H-1B visa number from the 20,000 cap will be considered with the other H-1B petitions in the random selection for the 65,000 cap filed on the first five business days, the announcement said.

The USCIS further said petitions for new H-1B employment are exempt from the cap if the foreigners will work at the defined institutions of higher education or a related or affiliated non-profit entities, or at non-profit research organisations or governmental research organisations. Thus, employers may continue to file petitions for these exempt H-1B categories regardless of H-1B visa number availability.

The USCIS said it will start receiving H-1B petitions from April 1 for FY09 beginning October 1. When it is determined that the caps have been reached, the USCIS will employ a random selection process to choose among the petitions received on the “final receipt date”.

Microsoft chairman Bill Gates, among others, has repeatedly urged the US Congress to let more foreign engineers, including Indians, to work in the US as immigration restrictions were forcing US high-tech firms to outsource jobs overseas.
The current cap of 65,000 H-1B visas aimed at highly skilled professionals “is arbitrarily set and bears no relation to the US economy’s demand for skilled professionals”, he told a Congressional panel recently. “If we increase the number of H-1B visas that are available to US companies, employment of US nationals is also likely to grow as well.”

A recent study by the National Foundation for American Policy (NFAP), in fact, shows that American businesses are finding it hard to fill skilled positions even as H-1B visas that bring foreign professionals, including a large number from India, are creating jobs in the US. Confirming Gates’ contention that an arbitrary cap on H-1B visas is forcing high tech firms to outsource jobs, the study found major US technology companies today average more than 470 job openings for skilled positions in the US while defence companies have more than 1,265 each.

A second complementary study by NFAP found after examining H-1B filings and year-by-year job totals for the technology companies in the Standard & Poor (S&P) 500 that hiring skilled foreign nationals on H-1B visas is associated with increases in employment at US technology companies.

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