GOLDMAN SACHS:GOLDMAN SACHS Group said quarterly profit plummeted 70 per cent as the worst market slump in decades led to weaker-than-expected revenues, knocking the stock to its lowest level in nearly three years.

Despite this, the larger of the two major US investment banks still standing beat profit expectations.

Goldman did so even as it recorded $1.1 billion in writedowns and losses from its principal investments. It was the biggest earnings decline since the company went public in 1999.

Goldman shares dropped 2.5 per cent in afternoon trading.

The results upset investors during a week in which Lehman Brothers filed for bankruptcy and Merrill Lynch agreed to a Bank of America takeover.

"People were hoping for some good news in a sea of gloom, and I don't think they got it," said Matt McCormick, portfolio manager and analyst at Bahl & Gaynor Investment Counsel.

Goldman so far has navigated the turmoil better than its peers, avoiding big writedowns.

Yet company executives acknowledged their business follows the global economy and right now conditions are grim.

In response, Goldman is playing defence - hoarding capital and cash, and shedding risky assets.

"We've become even more cautious in our approach," Goldman chief financial officer David Viniar told reporters.

Net income fell to $845 million, or $1.81 a share, for the quarter ended August 29th, down from $2.85 billion, or $6.13, a year earlier.

Net revenue fell by half to $6.04 billion as deal activity slowed, trading conditions worsened and a broad range of assets fell sharply in value.

Earnings beat analysts' reduced expectations of $1.75 a share, but revenue fell short of the consensus target of $6.3 billion

Goldman shares fell $3.40 to $132.10 after dropping as low as $117.24 on the New York Stock Exchange.

On Monday they dropped 12 per cent to a five-year low, the biggest one-day drop in more than eight years, as the credit crunch picked up momentum in its second year. - (Reuters)