Investment banks dominated the earnings highlights Tuesday as three of the world’s largest players in the sector delivered quarterly results.

Goldman Sachs Group, Inc. (GS: chart) reported Tuesday higher-than-expected earnings for the quarter through August 29 on the back of strong demand for fixed-income securities and reviving securities businesses.

Before market open Tuesday, Goldman posted third-quarter net earnings of $677 million, or $1.32 a share, up from $1.00 a share from the year-ago period. The New York investment bank topped analysts’ estimates by 10 cents with the average forecast pointing out an expected $1.22.

Goldman’s net revenue climbed to $3.79 billion from $3.65 for the corresponding quarter a year ago. Still, net revenue marked a decline from $3.99 billion in the second quarter. Revenue from trading and principal investments was $1.62 billion, up from $1.49 billion for the year-earlier quarter, while revenues from investment banking advisory and underwriting businesses increased to $687 million from $652 million for the year-ago period.

Shares of Goldman dropped 3.89% to close at $89.06 on the New York Stock Exchange, Tuesday.

Lehman Brothers Holdings Inc. (LEH: chart) largely beat the average analysts’ forecast after posting net income of $480 million, or $1.81 a share, for the quarter ended August 31, up from a generally expected $1.35, according to Thomson First Call.

The New York financial services firm saw its third-quarter net earnings more than double after it reported earnings of $194, or 70 cents a share, a year ago.

Net revenue, or total revenue minus interest expense, soared expectedly 74% to $2.35 billion from $1.35 billion. Revenue from principal transactions jumped to $1.2 billion from $234 million, while investment banking generated revenue rose 7.3% to $458 million. Both results offset a 12% slide in revenue from commissions to $314 million and a 19% drop in revenue from interest and dividends dropped 19% to $2.47 billion.

Lehman Brothers attributed its positive fiscal results to its strong fixed-income business and the significantly improving equities business amid positive market sentiment. The stock rose 69 cents Tuesday to close at $70.90.

Another major financial services company, Morgan Stanley (MWD: chart) posted a third-quarter profit of $1.27 billion, or $1.15 a share, a more than two-fold rise from $0.55 a share in the year-earlier quarter. Morgan Stanley’s net earnings for the quarter ended August 31 included a gain of $350 million, or 32 cents a share, due to changes in its equity-based compensation program.

The change in accounting for employee equity awards largely bolstered the global investment bank’s earnings. Morgan Stanley's net revenue rose 13% to $5.25 billion from $4.64 billion a year earlier. Revenues from fixed-income sales and trading soared 110% from last year to $1.46billion. Principal transactions surged to $2.1 billion from $1.6 billion in the prior quarter.

Analysts had projected a lower $0.69 per-share profit for Morgan Stanley.

Shares of the company ended Tuesday up $1.18, or 2.3 percent, at $52.33.

In the electronics sector, Richardson Electronics (RELL: chart) reported first-quarter earnings of $0.5 million, or 4 cents per share, marginally up from a profit of 2 cents per share in the year-ago period. The LaFox, Illinois-based manufacturer and distributor of wireless components attributed the increase in earnings for the quarter ended August 30 to rising sales in all four of the company's business units compared to the prior year.
Led by The Display Systems Group unit, sales in the first quarter of 2004 were $119.3 million, an increase of 10% from the prior year, standing for a fifth consecutive quarter of year-over-year sales growth.

Shares of Richardson Electronics inched down 8 cents Tuesday to close at $10.82.

Merix Corporation (MERX: chart) met analysts’ expectations for a pro-forma loss of 9 cents in the first quarter of fiscal 2004 was $0.09 per share compared to a pro-forma loss of $0.20 per share in the year-ago quarter.

Sales for the first quarter were up 27% to $30.7 million from $24.1 million for the first quarter a year ago. Similarly, first-quarter gross margin increased 6.7% from 1.7% in the year-earlier quarter.

Shares of the Forest Grove, Oregon-based manufacturer of advanced multilayer printed circuit boards jumped $1.29 to close at $17.40 on Tuesday.