CNN reports that Citibank delivered its worst quarterly results in its history with a $9.8B loss.
The financial giant also announced a writedown of $18.1 billion related to soured mortgage investments and a 41 percent cut to its dividend. At the same time, it said it was receiving a $12.5 billion infusion from investors in Kuwait, Singapore and the state of New Jersey.
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Citi’s top line took a big hit. The company reported revenue of $7.2 billion for the quarter, down 70 percent from $23.8 billion a year earlier.
The results were far worse than forecast. Analysts had expected the company to report a loss of $1 a share on revenue of $10.64 billion, according to analysts surveyed by earnings tracker Thomson Financial.
Think about this for a moment: revenue for this quarter was down 70% since same period last year. Seventy percent is quite a large number.
Citigroup’s stock endured one of its worst annual performances on record last year and was the worst performing Dow component in 2007. Its shares finished the year down 47 percent.
It seems that some investors see this as an opportunity to get in near the bottom. Are things going to turn around for Citi (and the financial sector overall), or are there much deeper problems that have yet to surface?
Buckle up, for we have an interesting year ahead of us.
First Citi, Then Merrill, what next? Things are looking down. I just saw a headline about the British exchange. The FTSE 100 is at its worst start since records began in 1936! Recently, its value plummeted 10% within the last 10 days with today being the worst decline since 9/11. So much for the problems being localized. If foreign investment is saving the US markets, then what is saving/will save the foreign markets?
In my opinion, I believe that some sort of balance will be achieved globally. The markets are very much based on perception. Why did things suddenly get bad?
People started talking.
The value of a stock or an entire index does depend on earnings, ROI, etc., but human emotions (perceptions, fears, optimism)play an immensely important role in the overall market stability. What we are seeing now is a combination of gloomy economic reports and intensified fear resulting in massive sell-offs.
Think about it. Large companies are posting record losses (losing billions in one quarter), the fed and the president are predicting a “downturn” (NOT a recession - they don’t want to say that awful word), and many people are expressing their fears of a weak dollar/weak economy by pulling out. These three factors pave the way for a recession, leaving people to wonder ‘when’ and not ‘if’.
Damn, I wish I didn’t pawn that solid gold paperweight my grandfather gave me.