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Goldman Shares Drop on Report of Job Cuts

Shares of Goldman Sachs dropped Friday on reports that the investment bank plans job cuts, though the firm downplayed the reductions, saying they're part of regular employee reviews.

Reuters, citing a Goldman spokesman, said on Friday that the company plans to cut about 5 percent of its global workforce.

Goldman shares were down more than 2 percent Friday.

Goldman subsequently told CNBC that it's targeting the bottom 5 percent of performers in its workforce to lay off as part of its annual review process. About 1,500 positions will be targeted in the review, which is related to individual performance, not business conditions, Goldman said.

Sources at rival investment bank Morgan Stanley cast doubts on Goldman's statement that the cuts are part of regular performance reviews, however. The sources told CNBC there's no reason for already lean Goldman to "prune" staff unless it sees 2008 being a difficult year.

In December, Goldman announced its fourth-quarter earnings had risen 2 percent, beating expectations, but the company gave a cautious outlook and said trading and investment banking markets would make earnings growth challenging.

Details of the cuts, which are set to take place across the bank's departments, are to be announced by March, Goldman said.

Goldman Sachs employs about 30,500 people worldwide.

The spokesman told Reuters that the bank is continuing to hire.

- Reuters contributed to this report.

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