Tuesday November 18, 2008

Citigroup to cut another 53000 jobs in huge mass layoff

biz.yahoo.com :

Citigroup shedding approximately 53,000 more employees in the coming quarters as the banking giant struggles to steady itself after suffering massive losses from deteriorating debt. The company said it is shrinking its work force by 20% from its 2007 peak of 375,000. The company had already announced in Oct 2008 that it was eliminating about 22,000 jobs from that level.

Citigroup has posted 4 straight quarterly losses. Citi shares fell to 13-year lows, down 4.8% to $9.06 in morning trading. Citigroup Chairman Win Bischoff said : "What all of us have done - and perhaps injudiciously - we've added a lot of people over ... this very benign period," Bischoff said. "... those job losses will obviously fall particularly heavily on the financial sector. Certainly they will fall particularly heavily on London and New York."

- Just about a couple of days ago, the talk on the street was about a 35,000 cut at Citigroup. Now the official announcement is out and they are talking about an even larger cut than anticipiated. Well, I am on record saying : "that leaves them with 300,000. I wonder if that would still be 200,000 too many."

Why do I say so?

* My target share price for Citigroup is zero.
* Their market cap is now below $50 billion, share price is now less than $9.
* Against that market cap, they have $62 billion worth of "goodwill" and "intangibles" on the balance sheet.
* Against that market cap, they have $2 trillion in debt and liabilities.

It's simple. A company like this with zero net worth and hence zero target share price should not be employing even 100,000 employees, so I am actually being generous with my estimates here. So, they're probably not done yet, and we haven't seen the last of the Citigroup mass layoffs.

See also :

1. Citigroup loses almost $10B, writes off $18B, receives $12.5B, slashes dividend and cuts 21,200 jobs
2. Wave of job cuts across corporate America, mass layoffs well beyond Wall Street
3. New York may lose 165000 jobs on mass layoffs due to credit crisis
4. London banks to cut 62000 jobs in mass layoffs as credit crisis worsens
5. Citigroup to cut 35000 jobs in massive layoff

(2008-11-18 09:09:36 SGT) [Biz] Permalink

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