Some of New York's biggest companies, including Wall Street giants Goldman Sachs and Citigroup, received doses of swine flu vaccine for at-risk employees, drawing criticism that the hard-to-find vaccine is going first to the privileged.
Hospitals, universities and the Federal Reserve Bank also got doses of the vaccine for employees who need it the most, such as pregnant women or chronically ill workers, according to the city's health department.
In order to receive the vaccine, companies had to have their own medical staff. Distributing large doses of the vaccine to such businesses is "a great avenue for vaccinating people at risk," said Jessica Scaperotti, spokeswoman for the city Department of Health and Mental Hygiene.
But critics said Wall Street firms should not have access to the vaccine before less wealthy Americans.
"Vaccines should go to people who need them most, not people who happen to work on Wall Street," Democratic Sen. Chris Dodd of Connecticut said Thursday.
"Wall Street banks have already taken so much from us. They've taken trillions of our tax dollars. They've taken away people's homes who are struggling to pay the bills," union official John VanDeventer wrote on the Web site of the 2 million-member Service Employees International Union. "But they should not be allowed to take away our health and well-being."
Meanwhile, the director of the federal Centers for Disease Control and Prevention sent a letter Thursday to state and local health departments asking them to review their distribution plans and make sure the vaccine is getting to high-risk groups.
Dr. Thomas Frieden said any decisions that appear to send vaccine beyond high-priority groups "have the potential to undermine the credibility of the program."
Swine flu vaccine has been in short supply nationwide because of manufacturing delays, resulting in long lines at clinics and patients being turned away at doctor's offices. The vaccine started trickling out in early October, and there are now nearly 36 million doses available.
The government-funded vaccine is being distributed to states, where health departments decide where to send the limited doses.
In New York, doctors at companies that have employee health services can request the vaccine along with other doctors but must agree to vaccinate only high-risk employees, Scaperotti said.
Last month, the city began offering vaccine to schoolchildren, as well as to pediatricians and obstetricians who asked for it. Scaperotti said two-thirds of the pediatricians in New York City have requested vaccine.
New Yorkers who cannot get the vaccine at work are receiving it from their doctors — if their doctors have it — or at community health clinics.
About 50 people waited to be vaccinated Thursday at a city-run clinic in Manhattan's Chelsea neighborhood. Matt Bohart said he and his 82-year-old father, Eugene Bohart, had been waiting for three hours for both swine flu and seasonal flu vaccines.
The younger Bohart said the fact that employees of some companies can get the vaccine at work seemed "not really fair."
But he added, "I don't begrudge the people who get it as long as others can get it as well."
Dr. William Schaffner, a flu expert at Vanderbilt University, said allocation of limited vaccine is tricky. CDC guidelines provide a list of patients who should be at the front of the line: children and young people through age 24, people caring for infants under 6 months, pregnant women, health care workers, and adults with health conditions such as asthma and diabetes.
Schaffner said that if corporations are giving shots to at-risk people, the distribution may have been appropriate. But he acknowledged there's "an appearance of potential irregularity."
Still, he said, "I have a feeling that if it were a Ford dealership that got vaccine, there wouldn't be quite as much excitement."
Scaperotti said 50 employers in New York City have received the vaccine so far. Besides Goldman Sachs and Citigroup, they include Time Inc. and hospitals such as Memorial Sloan-Kettering Cancer Center.
Goldman Sachs has received 200 doses, and Citigroup has received 1,200, health officials said.
In statements, Citigroup and Goldman Sachs said the vaccine would only go to those in high-risk groups.
"Goldman Sachs, like other responsible employers, has requested vaccine and will supply it only to employees who qualify," spokesman Ed Canaday said.
Morgan Stanley received 1,000 doses of the vaccine for its New York and suburban offices, but the company turned over its entire supply to local hospitals when it learned it received shipments before some area hospitals, spokeswoman Jeanmarie McFadden said.
Associated Press writers Stephen Bernard and Sara Lepro in New York City, Mike Stobbe in Atlanta and Valerie Bauman in Albany, N.Y., contributed to this report.
Showing posts with label citi. Show all posts
Showing posts with label citi. Show all posts
Wednesday, November 11, 2009
Tuesday, November 11, 2008
Why Amex Became a Bank
Futures are down as Asia and then Europe opened down. Get ready to hear a lot more economic stimulus plans from many governments. The dollar is up, commodities are down roughly 2 percent, and the bond market is closed.
Elsewhere:
1) Sign of the times: American Express' application to become a bank holding company was approved by the Federal Reserve.
What does this mean? Several analysts noted that it means AmEx [AXP 22.97 -1.01 (-4.21%) ]is assuming that the funding difficulties everyone is experiencing will be longer and more protracted than many expected.
By becoming a bank holding company, they are trying to broaden their funding sources, and will gain greater access to capital under the current and any future government-sponsored programs. And they do need capital. In the next six months, AmEx will need $4 billion in net commercial paper and $7 billiion of long-term debt.
Now they can turn to the real issue: stemming the losses coming from their consumer credit card division.
2) Las Vegas Sands [LVS 5.20 -2.80 (-35%) ]reported earnings below expectations, more importantly several projects are being delayed to preserve capital, and they are about to announce a $2.1 b capital raise. MGM [MGM 11.38 -1.28 (-10.11%) ]and Las Vegas Sands down 7 percent pre-open.
3) Here is is the type of news we WANT to be seeing. Citigroup [C 10.93 -0.28 (-2.5%) ]is joining JP Morgan[JPM 36.44 0.03 (+0.08%) ] by offering mortgage refinancings. Reducing consumer debt burdens is a key part of getting the economy going; expect to see more of this in the very near future.
Citigroup to Rework Thousands of Mortgages
This will have long-term positive effects for a variety of reasons (reduced foreclosures, increased confidence, reworked mortgage terms could be favorable) and while it may not be moving the needle this morning, as time goes on this news has a greater effect that its being given credit for this morning.
4) REITS. Lots of discussion on the Street yesterday about the fallout from the Circuit City bankruptcy, believed to be the latest of several bankruptcies coming. Impact on the REITs was profound, with many mall REITs down ten percent or more.
Credit Spreads
Pros Say: Currency Trends in Reverse
Credit Crunch Timeline
It's not just poor fundamentals killing REITs: they are experiencing higher capital costs as well. Interest rates are higher, the underwriting criteria has become much stricter, and loan-to-value ratios are dropping. It means that a lot of companies are going to de-leverage.
Speaking of funding difficulties: the Yellowstone Club, an exclusive mountain retreat in Montana which boasts former VP Dan Quayle and Bill Gates among its members, filed for bankruptcy Monday because they could not secure new financing.
Elsewhere:
1) Sign of the times: American Express' application to become a bank holding company was approved by the Federal Reserve.
What does this mean? Several analysts noted that it means AmEx [AXP 22.97 -1.01 (-4.21%) ]is assuming that the funding difficulties everyone is experiencing will be longer and more protracted than many expected.
By becoming a bank holding company, they are trying to broaden their funding sources, and will gain greater access to capital under the current and any future government-sponsored programs. And they do need capital. In the next six months, AmEx will need $4 billion in net commercial paper and $7 billiion of long-term debt.
Now they can turn to the real issue: stemming the losses coming from their consumer credit card division.
2) Las Vegas Sands [LVS 5.20 -2.80 (-35%) ]reported earnings below expectations, more importantly several projects are being delayed to preserve capital, and they are about to announce a $2.1 b capital raise. MGM [MGM 11.38 -1.28 (-10.11%) ]and Las Vegas Sands down 7 percent pre-open.
3) Here is is the type of news we WANT to be seeing. Citigroup [C 10.93 -0.28 (-2.5%) ]is joining JP Morgan[JPM 36.44 0.03 (+0.08%) ] by offering mortgage refinancings. Reducing consumer debt burdens is a key part of getting the economy going; expect to see more of this in the very near future.
Citigroup to Rework Thousands of Mortgages
This will have long-term positive effects for a variety of reasons (reduced foreclosures, increased confidence, reworked mortgage terms could be favorable) and while it may not be moving the needle this morning, as time goes on this news has a greater effect that its being given credit for this morning.
4) REITS. Lots of discussion on the Street yesterday about the fallout from the Circuit City bankruptcy, believed to be the latest of several bankruptcies coming. Impact on the REITs was profound, with many mall REITs down ten percent or more.
Credit Spreads
Pros Say: Currency Trends in Reverse
Credit Crunch Timeline
It's not just poor fundamentals killing REITs: they are experiencing higher capital costs as well. Interest rates are higher, the underwriting criteria has become much stricter, and loan-to-value ratios are dropping. It means that a lot of companies are going to de-leverage.
Speaking of funding difficulties: the Yellowstone Club, an exclusive mountain retreat in Montana which boasts former VP Dan Quayle and Bill Gates among its members, filed for bankruptcy Monday because they could not secure new financing.
Tuesday, October 28, 2008
C Citi fail?
Citigroup (C) is not going to make it, at least not an an independent company. The FT has reported that the head of Goldman Sachs (GS) called Citigroup CEO Vikram Pandit to discuss a merger. Goldman had converted itself into a commercial bank. Maybe it was worried it would go the way of Morgan Stanley (MS). But, the Treasury has come up with capital for all the big financial firms, so the urge to do something has probably passed for the world's premier investment bank.
It is different for Citigroup. There things have gone from bad to worse.
Citigroup is not likely to make it as an independent company. It will not be a buyer. It will be sold.
If the bank's stock price and analysts covering the company are right, Citi's fate could be determined by the end of the year. Over the last month, shares in the bank are down by 40%. Rival JPMorgan (JPM) is off 2%. Wells Fargo (WFC) is up 10%. Citi's market cap is down to $66 billion. Bank of America's is nearly $100 billion.
In the last quarter Citi lost $2.8 billion, or $.60 per share, compared with a profit of $2.2 billion, or $.44, in the period a year ago. Revenue fell 23% to $16.7 billion Bank analyst Meredith Whitney, who has been right more often than not on bank stocks, says that troubles in Citi's consumer group will drive up its losses more than expected. She cut her earnings estimates on the bank to a 2008 loss of $2.87 per share and a loss of $2.65 in 2009. Citi may not have the capital to cover those losses even with the government's cash injection.
What Whitney did not factor in just a week ago is that the credit crisis and signals of a recession have become much worse in a matter of days. Mortgage defaults are likely to rise more sharply then they have been as people lose jobs. The consumer's ability to pay his credit cards debt will deteriorate sharply. Citi's investment banking business is dead as a doornail. Most LBO loans are dropping in value as each week passes.
Citi will not report Q4 earnings for almost three months. It may run into awful trouble before that. The Fed and Treasury are going to have to find a merger candidate. Most likely that will be JP Morgan (JPM) because Bank of America (BAC) and Wells Fargo (WFC) are already digesting big acquisitions. Or, the government may turn around and take a majority stake in the money center bank the way it did with AIG (AIG) where it has already provided $90 billion in loans.
Vikram Pandit will have failed. It may take a little while for that to become absolutely clear, but Wall St. can take it to the bank. Or, maybe not.
Douglas A. McIntyre
It is different for Citigroup. There things have gone from bad to worse.
Citigroup is not likely to make it as an independent company. It will not be a buyer. It will be sold.
If the bank's stock price and analysts covering the company are right, Citi's fate could be determined by the end of the year. Over the last month, shares in the bank are down by 40%. Rival JPMorgan (JPM) is off 2%. Wells Fargo (WFC) is up 10%. Citi's market cap is down to $66 billion. Bank of America's is nearly $100 billion.
In the last quarter Citi lost $2.8 billion, or $.60 per share, compared with a profit of $2.2 billion, or $.44, in the period a year ago. Revenue fell 23% to $16.7 billion Bank analyst Meredith Whitney, who has been right more often than not on bank stocks, says that troubles in Citi's consumer group will drive up its losses more than expected. She cut her earnings estimates on the bank to a 2008 loss of $2.87 per share and a loss of $2.65 in 2009. Citi may not have the capital to cover those losses even with the government's cash injection.
What Whitney did not factor in just a week ago is that the credit crisis and signals of a recession have become much worse in a matter of days. Mortgage defaults are likely to rise more sharply then they have been as people lose jobs. The consumer's ability to pay his credit cards debt will deteriorate sharply. Citi's investment banking business is dead as a doornail. Most LBO loans are dropping in value as each week passes.
Citi will not report Q4 earnings for almost three months. It may run into awful trouble before that. The Fed and Treasury are going to have to find a merger candidate. Most likely that will be JP Morgan (JPM) because Bank of America (BAC) and Wells Fargo (WFC) are already digesting big acquisitions. Or, the government may turn around and take a majority stake in the money center bank the way it did with AIG (AIG) where it has already provided $90 billion in loans.
Vikram Pandit will have failed. It may take a little while for that to become absolutely clear, but Wall St. can take it to the bank. Or, maybe not.
Douglas A. McIntyre
Friday, October 3, 2008
Bad Wachovia
It appears that Wachovia's brass doesn't know what it means when an executive signs on the dotted line. Now it looks like the only ones who will gain will be the lawyers.
NEW YORK - Wachovia says it agreed to be acquired by San Francisco-based Wells Fargo & Co. in a $15.1 billion all-stock deal. But Citigroup now demands that Wachovia abide by the terms of its earlier deal to buy Wachovia's banking operations.
The clash sets up a battle over who will win Charlotte, N.C.-based Wachovia.
The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells deal would be done without it. The head of the FDIC said the agency is standing behind the agreement it made with Citigroup.
Citigroup says its agreement with Wachovia provides that Wachovia will not enter into any transaction with any party other than Citi or negotiate with anyone else.
NEW YORK - Wachovia says it agreed to be acquired by San Francisco-based Wells Fargo & Co. in a $15.1 billion all-stock deal. But Citigroup now demands that Wachovia abide by the terms of its earlier deal to buy Wachovia's banking operations.
The clash sets up a battle over who will win Charlotte, N.C.-based Wachovia.
The Citigroup deal would have been done with the help of the Federal Deposit Insurance Corp., but the Wells deal would be done without it. The head of the FDIC said the agency is standing behind the agreement it made with Citigroup.
Citigroup says its agreement with Wachovia provides that Wachovia will not enter into any transaction with any party other than Citi or negotiate with anyone else.
Sunday, June 29, 2008
Citi gets smart
I wonder when banks got out of the business of making loans, and go into everything else. I also wonder, why bankers are so fee crazy that they charge themselves. I guess it is a way to scratch each others' back.
Citogroupis planning to overhaul its bonus system for hundreds of top managers in an effort to increase co-operation and minimise in-fighting among the disparate parts of the sprawling financial services conglomerate.
The move is part of an ambitious plan by Vikram Pandit, chief executive, to restore Citi’s battered fortunes by harnessing synergies between its investment banking, commercial banking and wealth management divisions.
Citi is the latest Wall Street bank to rethink its bonus system in the wake of the credit crunch. However, while firms such as Merrill Lynch are trying to reduce incentives for bankers to take short-term risks and outsized bets, Citi’s efforts are mainly aimed at getting the most out of its huge and diverse business.
Since taking over from Chuck Prince in December, Mr Pandit has rebuffed calls to break up Citi and vowed to eliminate barriers between the company’s businesses to fully exploit its “universal banking” model.
“The new compensation plan is absolutely crucial to put teeth behind Vikram Pandit’s strategy,” a Citi executive said. “We have to put a premium on partnership-like behaviour.”
People close to the situation said Mr Pandit wanted to change the way bonuses were calculated to reward co-operation across different divisions and the performance of the company as a whole.
At present, bonuses at Citi, like those at most other banks, are largely dependent on the results of a manager’s division and individual performance.
People familiar with the matter said the ultimate goal was to link bonuses of senior managers and junior employees to Citi’s overall performance. However, they added that the first stage was likely to involve skewing bonuses to take into account how much shared business each manager generated.
Citi employees already get paid for referrals, when, for example, a wealth management adviser helps a client open a credit card or a checking account. However, Citi insiders say those sums are modest.
A change to Citi’s compensation structure could face internal resistance. Many senior managers may object to having their pay tied to businesses outside their control, especially when they are as volatile and cyclical as investment banking.
However, Mr Pandit has told senior colleagues he wants a new system in place by the end of the year, when annual bonuses are decided. John Donnelly, head of human resources, has been asked to draft detailed plans during the next few weeks.
Citogroupis planning to overhaul its bonus system for hundreds of top managers in an effort to increase co-operation and minimise in-fighting among the disparate parts of the sprawling financial services conglomerate.
The move is part of an ambitious plan by Vikram Pandit, chief executive, to restore Citi’s battered fortunes by harnessing synergies between its investment banking, commercial banking and wealth management divisions.
Citi is the latest Wall Street bank to rethink its bonus system in the wake of the credit crunch. However, while firms such as Merrill Lynch are trying to reduce incentives for bankers to take short-term risks and outsized bets, Citi’s efforts are mainly aimed at getting the most out of its huge and diverse business.
Since taking over from Chuck Prince in December, Mr Pandit has rebuffed calls to break up Citi and vowed to eliminate barriers between the company’s businesses to fully exploit its “universal banking” model.
“The new compensation plan is absolutely crucial to put teeth behind Vikram Pandit’s strategy,” a Citi executive said. “We have to put a premium on partnership-like behaviour.”
People close to the situation said Mr Pandit wanted to change the way bonuses were calculated to reward co-operation across different divisions and the performance of the company as a whole.
At present, bonuses at Citi, like those at most other banks, are largely dependent on the results of a manager’s division and individual performance.
People familiar with the matter said the ultimate goal was to link bonuses of senior managers and junior employees to Citi’s overall performance. However, they added that the first stage was likely to involve skewing bonuses to take into account how much shared business each manager generated.
Citi employees already get paid for referrals, when, for example, a wealth management adviser helps a client open a credit card or a checking account. However, Citi insiders say those sums are modest.
A change to Citi’s compensation structure could face internal resistance. Many senior managers may object to having their pay tied to businesses outside their control, especially when they are as volatile and cyclical as investment banking.
However, Mr Pandit has told senior colleagues he wants a new system in place by the end of the year, when annual bonuses are decided. John Donnelly, head of human resources, has been asked to draft detailed plans during the next few weeks.
Wednesday, April 9, 2008
C stock fall
Reports that Citigroup is taking steps to get some bad debt off its books had the markets poised for gains, but more worries about first-quarter earnings season and an outline by the Fed for future economic meltdowns crept into the markets.
The banking giant, which has been slammed by the subprime-mortgage meltdown, is close to a deal that would sell $12 billion of highly leveraged loans and bonds to private-equity firms Apollo Management, TPG Capital and Blackstone Group, according to published reports.
The buyers reportedly will pay just under 90 cents on the dollar for the securities. Shares of Citi, a Dow stock, rose 26 cents, or 1.1%, to $24.02 in morning trading.
The banking giant, which has been slammed by the subprime-mortgage meltdown, is close to a deal that would sell $12 billion of highly leveraged loans and bonds to private-equity firms Apollo Management, TPG Capital and Blackstone Group, according to published reports.
The buyers reportedly will pay just under 90 cents on the dollar for the securities. Shares of Citi, a Dow stock, rose 26 cents, or 1.1%, to $24.02 in morning trading.
Tuesday, January 15, 2008
Citi cut dividend
Citi has just committed the cardinal sin for blue chip stocks, it cut is dividend. I was completely shocked by this move, I have predicted that they would cut job over dividens, but I was wrong.
Citigroup Inc. lost almost $10 billion in last year's final three months, the largest quarterly deficit in the bank's 196-year history, and slashed its dividend as it recorded a mammoth write-down for bad bets on the mortgage industry.
The nation's largest bank wrote down the value of its portfolio by $18.1 billion. It also boosted loan-loss reserves by $4.1 billion, signaling further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to make their loan payments.
To bolster its capital, the bank also said Tuesday it has lined up $12.5 billion in new investments from sovereign wealth funds and existing shareholders.
That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.
The $12.5 billion in fresh equity adds to the $7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company. Citigroup's shares, which were trading around $55 a year ago, fell 70 cents to $28.36 in premarket trading on Tuesday.
The financial services company made no mention in its earnings report about job cuts beyond the 17,000 announced in the spring, a disappointment to some investors who were looking for a big downsizing. That means Chief Executive Vikram Pandit, who replaced Charles Prince in December, hasn't yet decided whether any of the global bank's core operations need to be cut or sold.
Pandit, calling the fourth-quarter results "clearly unacceptable," said in a statement Tuesday that "in an uncertain environment, these actions put us on our 'front foot,' focused on capturing opportunities that earn attractive returns for our shareholders."
The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.
Citigroup said the 41 percent cut in its quarterly dividend to 32 cents a share from 54 cents — along with the Asian investments and a stock offering of about $2 billion — will help boost its Tier 1 capital ratio, a measure of its financial strength.
Financial companies have been the highest dividend-paying sector in the stock market, but many — including Washington Mutual Inc., National City Corp. and the government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.
Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring $49 billion in hemorrhaging funds known as structured investment vehicles onto its books.
Over the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank — in addition to the $4.4 billion it has already gotten from Singapore's state-run Temasek Holdings.
In my opinion if you are in the stock market for 2-5 (or more) years, now is a good time to buy, but this is not a stock that you should consider if you are looking to mkae a quick buck.
Citigroup Inc. lost almost $10 billion in last year's final three months, the largest quarterly deficit in the bank's 196-year history, and slashed its dividend as it recorded a mammoth write-down for bad bets on the mortgage industry.
The nation's largest bank wrote down the value of its portfolio by $18.1 billion. It also boosted loan-loss reserves by $4.1 billion, signaling further problems in its consumer businesses as deflated home prices, high energy and food costs, and rising unemployment weigh on people's ability to make their loan payments.
To bolster its capital, the bank also said Tuesday it has lined up $12.5 billion in new investments from sovereign wealth funds and existing shareholders.
That includes $6.88 billion from the Government of Singapore Investment Corp. for a 4 percent stake. Other investors were Capital Research Global Investors, Capital World Investors, the Kuwait Investment Authority, the New Jersey Division of Investment, shareholder Prince Alwaleed bin Talal of Saudi Arabia and former chief executive Sanford Weill and his family foundation.
The $12.5 billion in fresh equity adds to the $7.5 billion that Citi got in November from the Abu Dhabi Investment Authority in exchange for a 4.9 percent stake in the company. Citigroup's shares, which were trading around $55 a year ago, fell 70 cents to $28.36 in premarket trading on Tuesday.
The financial services company made no mention in its earnings report about job cuts beyond the 17,000 announced in the spring, a disappointment to some investors who were looking for a big downsizing. That means Chief Executive Vikram Pandit, who replaced Charles Prince in December, hasn't yet decided whether any of the global bank's core operations need to be cut or sold.
Pandit, calling the fourth-quarter results "clearly unacceptable," said in a statement Tuesday that "in an uncertain environment, these actions put us on our 'front foot,' focused on capturing opportunities that earn attractive returns for our shareholders."
The loss for the quarter totaled $9.83 billion, or $1.99 per share, compared with earnings of $5.13 billion, or $1.03 per share, during the same quarter a year earlier. Citigroup's revenue fell to $7.22 billion, down 70 percent from $23.83 billion in the final quarter of 2006.
Citigroup said the 41 percent cut in its quarterly dividend to 32 cents a share from 54 cents — along with the Asian investments and a stock offering of about $2 billion — will help boost its Tier 1 capital ratio, a measure of its financial strength.
Financial companies have been the highest dividend-paying sector in the stock market, but many — including Washington Mutual Inc., National City Corp. and the government-sponsored lenders Freddie Mac and Fannie Mae — have pared those payouts in recent months.
Citigroup's decision to cut its dividend and seek new cash from outside investors was widely anticipated on Wall Street after months of scrutiny over the bank's deteriorating operations. The biggest was Citigroup's bad bets on mortgage-backed bond instruments called collateralized debt obligations. It also was forced to bring $49 billion in hemorrhaging funds known as structured investment vehicles onto its books.
Over the past several weeks, Asian funds have been buying up the battered stocks of struggling U.S. banks. Early Tuesday, Merrill Lynch said it will receive a total of $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank — in addition to the $4.4 billion it has already gotten from Singapore's state-run Temasek Holdings.
In my opinion if you are in the stock market for 2-5 (or more) years, now is a good time to buy, but this is not a stock that you should consider if you are looking to mkae a quick buck.
Monday, November 5, 2007
Buy Low... Sell later
The markets seem to be in turmoil: oil stocks are falling, and the financial sector looks more like the auto industry of early this decade. The airlines seem to be leaking jet fuel. In the border scope, the Nikkei 225 lost 1.6% to 16,254.67, on top of Monday's 1.5% fall; Australia's S&P/ASX 200 declined 0.9% to 6,634.90, New Zealand's NZX 50 index dropped 0.7% to 4,124.20. What's next?
In a throw back to the mid-late 1990s, its time to look at tech. For started the Big G has decided that the future of search is mobile. So it teamed up, with other behemoths Motorola Inc,Sprint Nextel, Qualcom, and whom ever else they decide that they may want to team up with, to roll out their new mobile phone footprint. What Google has decided to do is control the next generation of cell phone software.
Watch closely, Google will not stop climbing until it hits the $900/share mark.
Sunny Day
One of the nations largest server/software manufactures Sun Microsystems has finally ventured back into the black for a full year. This is the first time Sun has achieved such a feat since the dot.com bubble burst. Sun shares gained 11 cents, or 2 percent, to close at $5.71. After the results were released, the stock price fell 14 cents to $5.57.Rating: Buy. Sun is aggressively cutting cost and jobs to make themselves more profitable. Right now they are a value stock, but with new products on the horizon they will grow over the next 12 months. Our target for JAVA is $12.5. Sun expects a gross margin between 44 percent and 47 percent for the full 2008 fiscal year, above its previous estimates. Revenue is expected to grow in the low to mid-single digits.
Another tech hot pick is Novatel Wireless Inc. which swung to third-quarter net income of $9.2 million, or 28 cents a share, from a year-earlier loss of $895,000, or 3 cents a share. Excluding share-based compensation, Novatel reported earnings of 31 cents a share. The San Diego communications company said revenue jumped 90% to $104.6 million from $55.1 million. On average, analysts surveyed by Thomson Financial expected earnings of 23 cents a share on revenue of $102 million. Looking ahead, Novatel expects fourth-quarter earnings of 31 cents a share on revenue of $120 million. Excluding share-based compensation, Novatel expects fourth-quarter earnings of 34 cents a share.
In a throw back to the mid-late 1990s, its time to look at tech. For started the Big G has decided that the future of search is mobile. So it teamed up, with other behemoths Motorola Inc,Sprint Nextel, Qualcom, and whom ever else they decide that they may want to team up with, to roll out their new mobile phone footprint. What Google has decided to do is control the next generation of cell phone software.
Watch closely, Google will not stop climbing until it hits the $900/share mark.
Sunny Day
One of the nations largest server/software manufactures Sun Microsystems has finally ventured back into the black for a full year. This is the first time Sun has achieved such a feat since the dot.com bubble burst. Sun shares gained 11 cents, or 2 percent, to close at $5.71. After the results were released, the stock price fell 14 cents to $5.57.Rating: Buy. Sun is aggressively cutting cost and jobs to make themselves more profitable. Right now they are a value stock, but with new products on the horizon they will grow over the next 12 months. Our target for JAVA is $12.5. Sun expects a gross margin between 44 percent and 47 percent for the full 2008 fiscal year, above its previous estimates. Revenue is expected to grow in the low to mid-single digits.
Another tech hot pick is Novatel Wireless Inc. which swung to third-quarter net income of $9.2 million, or 28 cents a share, from a year-earlier loss of $895,000, or 3 cents a share. Excluding share-based compensation, Novatel reported earnings of 31 cents a share. The San Diego communications company said revenue jumped 90% to $104.6 million from $55.1 million. On average, analysts surveyed by Thomson Financial expected earnings of 23 cents a share on revenue of $102 million. Looking ahead, Novatel expects fourth-quarter earnings of 31 cents a share on revenue of $120 million. Excluding share-based compensation, Novatel expects fourth-quarter earnings of 34 cents a share.
Sunday, November 4, 2007
Citi - off the wire & into the fire
NEW YORK (AP) -- Citigroup Inc. Chief Executive Charles Prince is expected to step down soon from the helm of the nation's largest bank, which many shareholders and analysts say needs new leadership to extract itself from a mess of worrisome debt.
If he does resign, Prince, 57, would become the second CEO at a major U.S. financial institution to leave during this year's credit crisis, following Merrill Lynch's Stan O'Neal.
Citigroup's board is meeting Sunday, and Prince will offer his resignation then, The Wall Street Journal first reported Friday, citing unnamed people familiar with the situation. The New York Times also reported Prince will resign and said the company might name former Treasury Secretary Robert Rubin, who now chairs the bank's executive committee, as interim chairman.
Citigroup spokesman Michael Hanretta would not comment on the reports.
Prince became chief executive of Citigroup in October 2003. Many shareholders have blasted him openly for much of his tenure, as Citigroup's stock lagged its peers. Shares closed Friday at $37.73, about 20 percent below where they were when Prince became CEO.
Prince's position looked especially shaky after the company on Oct. 1 estimated that third-quarter profit would decline about 60 percent to some $2.2 billion after seeing nearly $6 billion in credit costs and write-downs of overly leveraged corporate debt and souring home mortgages. At that time, Prince said the bank's earnings would return to normal in the fourth quarter.
But when Citigroup released its third-quarter results two weeks later, the write-downs and credit costs exceeded $6 billion, and Chief Financial Officer Gary Crittenden indicated the outlook going forward wasn't as upbeat as Prince had predicted.
Citigroup wasn't alone in its third-quarter turmoil, of course. When borrowers with poor credit stopped paying their mortgages, banks not only had to take losses on those subprime mortgages, they also saw instruments in their portfolios backed by mortgages plummet in value.
But Citigroup's stumbles were particularly grievous, given the bank's size, history and CEO, who has been telling shareholders for years to give his strategy a chance. Even in October, Prince said in a call to analysts: "I think any fair-minded person would say that strategic plan is working."
Analysts believe Citigroup has more losses ahead of it. Deutsche Bank analyst Mike Mayo -- who told Prince during a conference call after Citigroup's results were released that investors wanted a significant change in management -- estimated Thursday that Citigroup would have to write down another $4 billion.
In early October, the bank combined its investment banking and alternative investments businesses into one unit led by Vikram Pandit, who had led Citigroup's alternative investments unit. In that shuffle, Tom Maheras, co-CEO of the investment banking unit, left.
But at the time, Rubin and Saudi Arabian Prince Alwaleed bin Talal -- Citigroup's biggest individual shareholder and once a critic of Prince -- expressed their support for the bank's embattled CEO.
When asked if Alwaleed still supported Prince, his representatives on Saturday said he did not wish to comment on any media speculation.
By Madlen Read, AP Business Writer
If he does resign, Prince, 57, would become the second CEO at a major U.S. financial institution to leave during this year's credit crisis, following Merrill Lynch's Stan O'Neal.
Citigroup's board is meeting Sunday, and Prince will offer his resignation then, The Wall Street Journal first reported Friday, citing unnamed people familiar with the situation. The New York Times also reported Prince will resign and said the company might name former Treasury Secretary Robert Rubin, who now chairs the bank's executive committee, as interim chairman.
Citigroup spokesman Michael Hanretta would not comment on the reports.
Prince became chief executive of Citigroup in October 2003. Many shareholders have blasted him openly for much of his tenure, as Citigroup's stock lagged its peers. Shares closed Friday at $37.73, about 20 percent below where they were when Prince became CEO.
Prince's position looked especially shaky after the company on Oct. 1 estimated that third-quarter profit would decline about 60 percent to some $2.2 billion after seeing nearly $6 billion in credit costs and write-downs of overly leveraged corporate debt and souring home mortgages. At that time, Prince said the bank's earnings would return to normal in the fourth quarter.
But when Citigroup released its third-quarter results two weeks later, the write-downs and credit costs exceeded $6 billion, and Chief Financial Officer Gary Crittenden indicated the outlook going forward wasn't as upbeat as Prince had predicted.
Citigroup wasn't alone in its third-quarter turmoil, of course. When borrowers with poor credit stopped paying their mortgages, banks not only had to take losses on those subprime mortgages, they also saw instruments in their portfolios backed by mortgages plummet in value.
But Citigroup's stumbles were particularly grievous, given the bank's size, history and CEO, who has been telling shareholders for years to give his strategy a chance. Even in October, Prince said in a call to analysts: "I think any fair-minded person would say that strategic plan is working."
Analysts believe Citigroup has more losses ahead of it. Deutsche Bank analyst Mike Mayo -- who told Prince during a conference call after Citigroup's results were released that investors wanted a significant change in management -- estimated Thursday that Citigroup would have to write down another $4 billion.
In early October, the bank combined its investment banking and alternative investments businesses into one unit led by Vikram Pandit, who had led Citigroup's alternative investments unit. In that shuffle, Tom Maheras, co-CEO of the investment banking unit, left.
But at the time, Rubin and Saudi Arabian Prince Alwaleed bin Talal -- Citigroup's biggest individual shareholder and once a critic of Prince -- expressed their support for the bank's embattled CEO.
When asked if Alwaleed still supported Prince, his representatives on Saturday said he did not wish to comment on any media speculation.
By Madlen Read, AP Business Writer
Thursday, November 1, 2007
Thursday Turmoil
WASHINGTON (AP) -- The Federal Reserve pumped $41 billion into the U.S. financial system Thursday, the largest cash infusion since September 2001, to help companies get through a credit crunch.
The action came one day after Fed Chairman Ben Bernanke and all but one of his central bank colleagues voted to slice a key interest rate. It was the second time in six weeks that policymakers acted to protect the economy from the effects of the housing downturn and credit troubles.
The Federal Reserve Bank of New York, which carries out the central bank's open market operations, moved Thursday to inject $41 billion in temporary reserves into the financial system.--
Where to begin... Citi needs to raise 6b over the next six months, but that will not lead them to cut their dividend. Why? Because if they do, their stock price will tank, and fast. Amid record composite trading volume, Citi shares fell $2.85 to $38.51, their lowest level since May 2003 and their biggest one-day drop since September 2002, when the company was swamped with regulatory concerns.
Citi earlier this month reported a 57 percent drop in third-quarter profit, renewing speculation about the job security of Charles Prince, its chief executive.
G7 Hundred
Google has signed agreements with T-Mobile, SprintNextel (S), Verizon, and Alltel to provide ad content to new mobile devises. This expansion of its core function is asset light, and should yield high returns. People familiar with the Big G's plan say that Google is in active talks with No. 2 U.S. mobile carrier Verizon Wireless (VZ) )about putting Google applications on phones it offers. Additionally, Google only spends about 500m in capital spending, that means that everything they spend is form revenue. Plus they are investing heavy in R&D. I see the stock continuing to climb and kick mud into the face of their detractors. Good will pass $800/share before the end of the year and by Q2 next year the price will finally plateau at around $950/share. Then we can talk split.
F Bomb
On the day when the pilot of the A-Bomb dies, the market dropped is own F-Bomb. Ford Motor Co (F) posted on Thursday a 9.5 percent decline in U.S. sales for October, hurt by a drop in demand for its best-selling F-Series pickup truck.
Ford also increased Q4 sales estimated by 5,000 units, for some reason, to 645,000 vehicles. Consumer spending will remain on the decline as the housing market shocks may begin to subside, gas prices and consumer confidence will continue to decline.
In the silver lining announcement of the day, WalMart has announced that it will roll back prices early this year, ahead the typical Black Friday.
Todays Bullish Picks
1. Microsoft
2. Crocs, Inc. (CROX)
3. Exxon Mobile, Corp. (XOM_
4. US Steel (X)
The action came one day after Fed Chairman Ben Bernanke and all but one of his central bank colleagues voted to slice a key interest rate. It was the second time in six weeks that policymakers acted to protect the economy from the effects of the housing downturn and credit troubles.
The Federal Reserve Bank of New York, which carries out the central bank's open market operations, moved Thursday to inject $41 billion in temporary reserves into the financial system.--
Where to begin... Citi needs to raise 6b over the next six months, but that will not lead them to cut their dividend. Why? Because if they do, their stock price will tank, and fast. Amid record composite trading volume, Citi shares fell $2.85 to $38.51, their lowest level since May 2003 and their biggest one-day drop since September 2002, when the company was swamped with regulatory concerns.
Citi earlier this month reported a 57 percent drop in third-quarter profit, renewing speculation about the job security of Charles Prince, its chief executive.
G7 Hundred
Google has signed agreements with T-Mobile, SprintNextel (S), Verizon, and Alltel to provide ad content to new mobile devises. This expansion of its core function is asset light, and should yield high returns. People familiar with the Big G's plan say that Google is in active talks with No. 2 U.S. mobile carrier Verizon Wireless (VZ) )about putting Google applications on phones it offers. Additionally, Google only spends about 500m in capital spending, that means that everything they spend is form revenue. Plus they are investing heavy in R&D. I see the stock continuing to climb and kick mud into the face of their detractors. Good will pass $800/share before the end of the year and by Q2 next year the price will finally plateau at around $950/share. Then we can talk split.
F Bomb
On the day when the pilot of the A-Bomb dies, the market dropped is own F-Bomb. Ford Motor Co (F) posted on Thursday a 9.5 percent decline in U.S. sales for October, hurt by a drop in demand for its best-selling F-Series pickup truck.
Ford also increased Q4 sales estimated by 5,000 units, for some reason, to 645,000 vehicles. Consumer spending will remain on the decline as the housing market shocks may begin to subside, gas prices and consumer confidence will continue to decline.
In the silver lining announcement of the day, WalMart has announced that it will roll back prices early this year, ahead the typical Black Friday.
Todays Bullish Picks
1. Microsoft
2. Crocs, Inc. (CROX)
3. Exxon Mobile, Corp. (XOM_
4. US Steel (X)
Thursday, October 4, 2007
Financial Sector Options
For the savvy investor now may be the time to get back into financials, and a good place to start is Citi. The Nation's largest bank is really under emense pressure to step up its earnings. Citi's stock price is down more than 14% from the beginning of the year, and that has investors out for blood. Additionally Citigroup's equity report did not help; up just 1.7% since Aug. 10, versus a 5.7% gain for J.P. Morgan, a 4.5% gain for Bank of America and 8.1% gain for Wachovia. This means that the margins are there Citi just has to find them.
All of the big banks: Bank of America, Citigroup, J.P. Morgan, and Wachovia, have all recently begun tightening credit default swap spreads. If you want to take a gamble and be ahead of the curve on the rebound, try some stock options. What this will do is limit the risk in a particular stock, and/or sector. Remember the financial sector as a whole is just now peering though the credit-cloud that has been cast over it by the subprime mortgage crisis. The November 50 calls are a good bet.
Credit Default Swap
Many people may not have a clue as to what a CDS is, so we will explain. A credit default swap, or CDS, is a tradable contract, although not in the listed-securities market, that reflects the credit risk of a particular company, like Citigroup. The contract term is typically five years, and during that time the CDS owner is protected from a "credit event." In essence, a credit default swap is like a put option.
A tightening of credit spreads bodes well for a stock because it demonstrates that investors are less afraid the company will default on its bonds. CDS are increasingly important in options trading because there is a growing interest in the influence CDS products have on options volatility.
All of the big banks: Bank of America, Citigroup, J.P. Morgan, and Wachovia, have all recently begun tightening credit default swap spreads. If you want to take a gamble and be ahead of the curve on the rebound, try some stock options. What this will do is limit the risk in a particular stock, and/or sector. Remember the financial sector as a whole is just now peering though the credit-cloud that has been cast over it by the subprime mortgage crisis. The November 50 calls are a good bet.
Credit Default Swap
Many people may not have a clue as to what a CDS is, so we will explain. A credit default swap, or CDS, is a tradable contract, although not in the listed-securities market, that reflects the credit risk of a particular company, like Citigroup. The contract term is typically five years, and during that time the CDS owner is protected from a "credit event." In essence, a credit default swap is like a put option.
A tightening of credit spreads bodes well for a stock because it demonstrates that investors are less afraid the company will default on its bonds. CDS are increasingly important in options trading because there is a growing interest in the influence CDS products have on options volatility.
Monday, October 1, 2007
Q3 Earning report
The first big story of the week is out, and it is a whooper. Citi's earning will fall nearly 60% analysist are reporting. On top of that Citi said its profit were hurt substantially due to loan loss reserves of about $2 billion.
While all of that sounds very bad, it is not all doom and gloom; while Citi will not see any increased growth, Citigroup's said third-quarter revenue will be about the same as it was this time last year. But it will write down about $1.4 billion of its $57 billion portfolio of leveraged loans, lose about $1.3 billion on the value of securities backed by subprime loans, and lose $600 million in fixed-income credit trading, as the bank had trouble navigating market volatility. At some point this has to be expected, growth slows.
"While the direction of the pre-announcement should not come as a surprise, the magnitude is greater than expected with credit being a factor," Lehman Brothers analysts wrote in a note. "Still, we wonder with (Citigroup) among others, attempting to put a tough quarter behind them, if this move helps flush out the negative factors plaguing financials."
September is traditionally the worst month for stocks, the same is true for the 3rd quarter. This is the time when managers begin to make shifts so that assets are in line with future predictions for the beginning of the new year. So looses are no a bad thing. This is a good time to buy; many large caps will look like value stocks right now. Several analysts have predicted major banks may decide to log hefty losses this quarter to clean up their balance sheets ahead of the new year.
Before Citigroup's warning, analysts had been all over the map in their earnings forecasts, but on average had anticipated a modest profit rise. The bank moved its earnings release date to Oct. 15 from Oct. 19. Last year, Citigroup's third-quarter net income was $5.51 billion, or $1.10 per share.
The week of Oct. 15, Bank of America Corp. and JPMorgan Chase & Co. -- the nation's second- and third-largest banks, respectively -- will also be reporting their third-quarter (loss?) results. For BoA we are expecting losses, remember they had to visit the Discount Window just a few weeks ago.
Profit losses will not be limited to the financial sector alone, it looks like for the first time in more than 10 years, the nations largest chain pharmacy, Walgreens, will report a loss as well.
While all of that sounds very bad, it is not all doom and gloom; while Citi will not see any increased growth, Citigroup's said third-quarter revenue will be about the same as it was this time last year. But it will write down about $1.4 billion of its $57 billion portfolio of leveraged loans, lose about $1.3 billion on the value of securities backed by subprime loans, and lose $600 million in fixed-income credit trading, as the bank had trouble navigating market volatility. At some point this has to be expected, growth slows.
"While the direction of the pre-announcement should not come as a surprise, the magnitude is greater than expected with credit being a factor," Lehman Brothers analysts wrote in a note. "Still, we wonder with (Citigroup) among others, attempting to put a tough quarter behind them, if this move helps flush out the negative factors plaguing financials."
September is traditionally the worst month for stocks, the same is true for the 3rd quarter. This is the time when managers begin to make shifts so that assets are in line with future predictions for the beginning of the new year. So looses are no a bad thing. This is a good time to buy; many large caps will look like value stocks right now. Several analysts have predicted major banks may decide to log hefty losses this quarter to clean up their balance sheets ahead of the new year.
Before Citigroup's warning, analysts had been all over the map in their earnings forecasts, but on average had anticipated a modest profit rise. The bank moved its earnings release date to Oct. 15 from Oct. 19. Last year, Citigroup's third-quarter net income was $5.51 billion, or $1.10 per share.
The week of Oct. 15, Bank of America Corp. and JPMorgan Chase & Co. -- the nation's second- and third-largest banks, respectively -- will also be reporting their third-quarter (loss?) results. For BoA we are expecting losses, remember they had to visit the Discount Window just a few weeks ago.
Profit losses will not be limited to the financial sector alone, it looks like for the first time in more than 10 years, the nations largest chain pharmacy, Walgreens, will report a loss as well.
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