GS Hiring Freeze [WSJ]
Goldman Sachs Group is now taking a "pause" on hiring that goes beyond the usual seasonal summer slowdown, according to people familiar with its plans. While the firm will make exceptions for top talent, this is significant. When the market leader makes such a move, you can bet others will follow. If Goldman is a leading indicator, this might become the first industrywide freeze since the tech-stock meltdown.
Nonetheless, taking a breather right now looks sensible. The money industry is enjoying fat times that even its top executives admit will be difficult to sustain. Indeed, take a look at what analysts expect Goldman to mint over the next few years. For its fiscal year ending in November, the firm should earn $21.50 a share, up 10% from last year's record, according to FactSet Research Systems. But in 2008, that's expected to drop to $21.10 a share, and to $19.30 the following year.
So it's understandable that Goldman, and some of its rivals, might ease up on adding new seats. Sure, this means some of the existing staff will have to work a little harder. But given the cost of hiring and buying out bonuses at the top of the cycle, this seems prudent. And, hey, if concerns about a slowdown prove overblown, it's not all bad. The bonus pool won't need to be split with any newbies.
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