When Oppenheimer & Co. analyst Meredith Whitney talks about Citigroup Inc., investors listen. And why not? Whitney correctly predicted two months in advance that Citigroup would lower its dividend to preserve capital. Now, Bloomberg reports that Whitney predicted in a research report Monday that Citigroup's first-quarter earnings will lose $1.15 a share, 4 times higher than her original estimate of a loss of 28 cents per share.
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Hmm. Does this mean that Citigroup is planning behind the scenes for a capital infusion or more divestitures to raise capital? And if so, will Whitney's other previous prediction that Citi would have to unload its Smith Barney Inc. come to fruition?
From the surface, Citigroup CEO Vikram Pandit is tightlipped on these matters, instead pushing layoffs as a solution. But as everyone knows, you can only cut so far, and, if push comes to shove, maybe a wholesale divestiture of a Smith Barney is the best remedy for an ailing Citi. - Gerald Magpily
See Bloomberg article
See TheDeal.com: Citi's panic button would be selling Smith Barney
Comments
I trust Ms. Whitney more than Citi management. Q1 will be another bloodbath. It will be interesting indeed to see Pandit's reaction/plan of action to this continuing mess. His best bet is to watch any daytime soap opera and copy the plot line. They are a lot more creative than anything Citi has displayed.
Such a smart guy, yet he hides under his desk and stays mum. Doesn't he and the Board realize that the street and the average investor will be more at ease and buy -in if they begin to be candid about the current health/situation.
Pandit's responce to all this is to bring in JSR as a consultant. Someone should remind the CEO that JSR was the guy who got outsmarted and lost control of this once great financial services company. In a sense he is as culpable as Sandy for the downward spiral of Citi.