Citigroup to Slash Jobs After Profit HitBy Reuters - | Posted 2008-04-18 Email Print
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Citigroup is in a state of economic flux.
NEW YORK (Reuters) - Citigroup Inc (C.N: Quote, Profile, Research) posted its second straight quarterly loss on Friday, hurt by more than $16 billion of write-downs and costs related to credit losses, and said it will cut another 9,000 jobs.
Though the $5.11 billion first-quarter loss was larger than expected, analysts and investors expressed optimism that the largest U.S. bank and its new chief executive, Vikram Pandit, were taking necessary steps to move past credit problems and drive down costs.
Citigroup shares rose $2.22, or 9.2 percent, to $26.25 in premarket electronic trading.
"It's a cathartic quarter," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "Vikram Pandit is coming in and making pretty big changes."
Citigroup's net loss totaled $1.02 per share, and compared with a year-earlier profit of $5.01 billion, or $1.01 per share. Revenue fell 48 percent to $13.22 billion.
Analysts, on average, expected a loss of 96 cents per share on revenue of $14.35 billion, according to Reuters Estimates.
"We're not happy with our financial results this quarter," Pandit said on a conference call. Nevertheless, he said his confidence in Citigroup's future is "extremely high."
The job cuts are in addition to 4,200 announced in the previous quarter. Citigroup said it ended March with about 369,000 employees.
Pandit is trying to focus on stronger businesses and on cutting costs, including jobs, after years of underinvestment and questionable risk management left New York-based Citigroup bearing the full brunt of the global credit market crisis.
In the last two weeks, Citigroup has said it was selling its Diners Club International credit card network and most of its North American commercial lending and leasing business. Expenses, meanwhile, fell 2 percent from the fourth quarter.
"Vikram Pandit was always going to shake the trees and get every skeleton out of the cupboard imaginable, which is what he's done," said David Buik, market strategist at Cantor Index in London.