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Goldman Sachs (NYSE: GS) has managed to surprise investors and avoid the credit crisis once more. The Wall Street powerhouse managed to book $2.1 billion in profit, which topped forecasts and sent shares higher. A sharp decline in leveraged loan activity was offset by a surge in equity underwriting as more companies looked to raise money during the quarter. Asset management and securities services also helped to make a spectacular quarter.

The investment bank noted that its net earnings for the second quarter came in at $4.58 per share, which was loser than the $4.93 per share a year ago, but higher than Wall Street's $3.42 per share estimate. Goldman Sachs also reported revenues that were 7.5% lower to $9.42 billion, but that also topped analyst estimates of $8.74 billion. Shares were already some 10% higher on the week but mobed up marginally on the news.

The impressive results came at the heels of a huge los at rival Lehman Brothers (NYSE: LEH) and at a tough time for investment banks in general. Lehman announced a $2.8 billion second-quarter loss while its management tried to calm investors concerned about a Bear Stearns style collapse on the horizon. Meanwhile, Morgan Stanley is expected to see its profit plunge some 60% from a year earlier.

In the end, Goldman Sachs continues to impress analysts and beat other competitors in the investment banking arena. This should also give them an edge in the future as they are able to attract and retain some of the best personnel in the industry thanks to the steep cuts elsewhere. It will be interesting to see where all of these banks are left when the market eventually recovers and they are looking to hire once again...

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Sirius Satellite Radio (NDAQ: SIRI) and XM Satellite Radio Holdings (NDAQ: XMSR) drew one step closer to consummating their planned merger yesterday after a key U.S. regulator expressed support for the 16-month-and-coming deal. FCC Chairman Kevin Martin confirmed published reports that he would support the transaction provided that the companies agreed to a series of conditions.

There had been concern that the merger between the two satellite radio giants would eliminate the possibility of any competition and create a monopoly. As a result, the companies are being forced to agree to a series of conditions including making 24 radio channels available for noncommercial and minority programming. In addition, the companies have to cap prices, provide interoperable radios and offer programming on an a la carte basis.

Martin's decision will likely remove the last remaining regulatory hurdle in one of the most length and heavily criticized decisions in the history of M&A. The Justice Department has already stated that competition from traditional and high-definition radio, iPods and MP3 players already presented a clear competitive environment. As a result, the merger no longer faces any antitrust hurdles.

Shares of both companies rose on the news.

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Yahoo Inc. (NDAQ: YHOO) shares dropped off a cliff today after the search company shunned Microsoft Corporation (NYSE: MSFT) completely in favor of a deal with Google Inc. (NDAQ: GOOG) instead. Management may have finally found a way out of the situation, but shareholders clearly disapproved of the new deal. Shares plummeted nearly 5 percent on the news as a Microsoft deal is now completely out of the picture.

The only hope remaining for some shareholders is Carl Icahn's continued involvement. The activist shareholder had been pushing for a deal with Microsoft and even nominated his own directors to the board in order to effect change. The aging investor isn't known for giving up either, so it should be a fight until the end. Investors don't have to look back too far to see that fact- he had to try twice to effect change in Motorola!

However, the fact remains that most proxy contests end up failing. Moreover, Microsoft has not indicated that it would still be interested in a deal even if Icahn did take over the company. The only thing that is for certain is that the Google deal would be voided if Icahn does win control over the search giant. This fact could put a strain on his popularity with institutional investors as a loss of a Google and Microsoft deal would put Yahoo back to step 1.

In the end, it is no secret that Yahoo needs to change something in order to get itself out of its current lull. Management believes that a partnership with Google would help increase its revenues. Shareholders believe that a sale to Microsoft represents the bet immediate solution. Overall, it looks like Google is the only clear winner as it has now secured a deal with Yahoo while also eliminating any deal with Microsoft that could boost its competition.

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