Goldman Sachs Group Inc. (GS) on Thursday said fourth-quarter profit rose 23 percent on strong fixed-income and commodities trading results and investment banking gains, but shares fell as revenue missed expectations.

The New York-based investment banking firm said net income rose to $1.19 billion, or $2.36 a share, in the quarter ended Nov. 30, from $971 million, or $1.89, in the year-earlier period.

The results exceeded the average analyst estimate of $2.30 a share, as compiled by Reuters Estimates, even as Wall Street boosted its earnings target by 11 percent over the past three months.

However, quarterly net revenue rose 13 percent to $4.58 billion from last year, falling short of the average estimate of $4.75 billion, according to Reuters Estimates.

Shares of Goldman tumbled $3. or 2.7 percent, to $106.25. Goldman's stock had surged in the past two months and was up 11 percent this year, outperforming the S&P 500 Index (search).

"I think the revenue numbers were lighter than The Street expected," said John O'Donoghue, managing director of NYSE-listed trading at Credit Suisse First Boston.

Analysts had forecast that the five biggest U.S. investment banks would boost earnings 25 percent in 2004, even as rising rates challenged Wall Street's bond market business -- its main growth driver in recent years.

The disappointing news follows a positive surprise from Lehman Brothers Holdings Inc. (LEH) on Wednesday, when Goldman's rival wowed investors with a 22 percent profit jump on surprisingly strong growth in mergers advisory and equity capital market revenue.

"After Lehman's strong earnings, the expectations were that Goldman and other investment banks would also have strong quarterly revenues, so this is a negative surprise for the company," said Timothy Ghriskey, chief investment officer of Solaris Asset Management.

At Goldman, fourth-quarter investment banking revenue rose 19 percent to $768 million from a year earlier, while its fixed income, currencies and commodities division boosted revenue by 28 percent, to $1.46 billion.

Goldman also recorded an unrealized gain of $254 million on its convertible preferred stock investment in Japan's Sumitomo Mitsui Financial Group (search), up from $173 million last year. That investment generated a $245 million loss in the third quarter.