Saturday May 10, 2008

Citigroup aims to shed $400 billion of assets

news.yahoo.com :

Citigroup said on Friday [9 May 2008] it plans to shed $400 billion of assets within three years and boost revenue by up to 10% annually, in a bid to restore profitability after huge losses tied to flagging mortgage and credit markets. Citigroup lost nearly $15 billion in the last two quarters, and has suffered more than $45 billion of write-downs and credit losses since last summer, as the housing slump deepened, subprime mortgages imploded and credit markets tightened. More jobs will be cut, on top of 13,200 announced this year.

Citigroup CEO Vikram Pandit said he plans to reduce $500 billion of non-core "legacy" assets, an amount he said was not "trivial," to below $100 billion in two to three years, largely through sales. Among the assets to be shed are real estate, leveraged loans, complex debt and structured investment vehicles. Citigroup ended March with $2.2 trillion of assets. Pandit has also slashed Citigroup's dividend by 41%, and the bank has raised more than $42 billion of capital since the fourth quarter. To help market itself, Citigroup is reintroducing the "Citi never sleeps" tagline, among the best-known marketing slogans in U.S. corporate advertising.

- The stock markets have never really been quite the same since the multi-trillion dollar crash single-handedly precipitated by my wife Biow's entry into stock investing back in Jul 2007. Okay, perhaps I exaggerate. A little.

I don't have much of a quarrel personally with the company, being a Citibank Visa customer myself. But as an observer of their stock movement, one has got to admit that their chart stinks. It has that "falling off a cliff" feeling - because that's precisely what it did, falling from a high of $55.55 on 18 May 2007 down to a low of $17.99 on 17 Mar 2008. That's a fall of some 67.6%. "Blue-chip stock", anyone? Only two of my small-cap, ultra high-risk mining stocks in my portfolio have been able to beat that record (down 70% and 80% respectively, and I do have to mention that on the flip side, two of my best junior mining stocks have gained over 300% and 400% respectively).

Let's talk about the technicals then - always a fun thing to do. Support levels for Citigroup are apparently around $20, $18, $12, and *cough* $3. Resistance levels are around $27, $30, $37 and $48 (chart observers always have to give the folks some hope don't we, even in "falling off the cliff" situations). But really. Don't take my word for it, but the $17-18 level did look like an intermediate bottom. If you had bought in high and had not averaged down somewhere between $18 and $27 then, yeah, I'm saying it here, you're a dope, lol. If you had, then you're half-smart - get the hell out when it hits a resistance level above your average cost level, be it at $30, $37 or perhaps *grin* $48.

See also :

1. Citigroup loses almost $10B, writes off $18B, receives $12.5B, slashes dividend and cuts 21,200 jobs
2. Citigroup to cut 20000 jobs and slash dividend : WSJ
3. Wall Street firms cut 34000 jobs, most since 2001 dotcom bust

(2008-05-10 19:04:54 SGT) [Biz] Permalink

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