Strong earnings out of Goldman Sachs (GS) would probably reverse the market’s perception that all is lost and prove the best companies on Wall St. can handle the pressure of the credit crisis.

Goldman delivered. It shares fell slightly, but its numbers were comparatively strong.

Goldman net revenue of $6.04 billion and net earnings of $845 million for its third quarter ended August 29. Diluted earnings per common share were $1.81 compared with $6.13 for the third quarter of 2007.

In other words, Goldman kept its head above water.

The broker left its dividend intact. The weaknesses in the numbers is where they were expected. Credit products included very weak results from investments and a loss of approximately $275 million. Mortgages included net losses of approximately $500 million on residential mortgage loans and securities and approximately $325 million on commercial mortgage loans and securities.

But, Goldman did not loose money. It may be the only large financial company that will be able to say that this quarter. Good management and a prudent use of leverage and hedging kept Goldman out of harm’s way.

Goldman will not have to sell itself or liquidate because of the burdens of mortgage-backed paper and ill-advised borrowing.

Goldman’s earnings were perhaps the only chance the market had to hold the line.

Goldman did its part.

Douglas A. McIntyre

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