Early Edition January 14 2009 at 06:09 AM Harry Maurer
Pandit Dismantles Weill's Citi Empire
Citigroup CEO Vikram Pandit is unraveling the financial services empire assembled by the legendary Sanford Weill. After booking $20 billion in net losses last year and being forced to accept a $45 billion U.S. government bailout, Citi's continuing problems are forcing Pandit--only 13 months on the job--to carve up the colossus built by Weill and Chuck Price.
Late on Jan. 13, the bank announced the anticipated sale of its Smith Barney brokerage unit to a joint venture controlled by Morgan Stanley. The sale will fatten Citi's coffers by nearly $10 billion in cash, after-tax gains, and cost savings, which should help offset up to $10 billion in losses that could be announced on Jan. 22 when the bank unveils its fourth-quarter results. Pandit may have to make more such big moves to fill the gaping hole in Citi's balance sheet.
Source: Bloomberg, Times of London, BusinessWeek
Banks Need Even More Bailout Money
President-elect Obama, the U.S. Congress, and Fed Chairman Ben Bernanke all appear to share a growing realization: U.S. banks need hundreds of billions more in bailout money--and soon.
Source: New York Times
Banking: Deutsche Loss, HSBC Worries
German giant Deutsche Bank surprised the market early Jan. 14 with a warning that it will report a $6.4 billion fourth-quarter loss due to writedowns and weak performance in credit and equity trading. Meanwhile, a new report from Morgan Stanley challenges the perception that HSBC remains relatively unscathed by the crisis, suggesting it may need to raise $30 billion and halve its dividend.
Source: MarketWatch
What Yahoo Needs from Bartz Right Now
The troubled Web's portal's new CEO has to provide "adult supervision," of course. But she also needs to bring focus, crisper management, and technical innovation.
Source: BusinessWeek
Change Sweeping to the FCC
Obama's selection of 46-year-old Julian Genachowski to head the Federal Communications Commission could help tilt the agency's agenda more towards the Internet and newer players in the communications business.
Source: Washington Post
Detroit Stuck in Low Gear
Automakers received more bad news at the world's largest auto show Jan. 13 as market researcher J.D. Power forecast a 27-year low in sales this year and auto bailout politics threw cold water on hopes for a speedy industry recovery.
Source: Reuters
Russian Gas Deal Unravels
Large parts of the EU were left without natural gas shipments from Russia on Jan. 13 as a deal brokered to end the dispute between Ukraine and energy giant Gazprom fell apart amid finger-pointing and recrimination.
Source: Wall Street Journal
China Now World's No. 3 Economy as German Growth Slows
China's National Bureau of Statistics reported Jan. 14 that the country's economy grew more than previously estimated in 2007, meaning that China overtook Germany as the world's third-largest economy that year, earlier than expected. Economists now predict China's 2009 GDP growth will fall to 7.9%. Figures released Jan. 14 indicate that Germany's growth fell to just 1.3% in 2008, lower than forecast.
Source: Guardian
Google Tackles Microsoft by Recruiting Resellers
The Web search giant is upping the stakes in its battle against Microsoft by lining up traditional software resellers to market its applications software packages to corporate customers.
Source: Reuters
Filming of Movies on L.A. Streets Declines
The number of feature films and commercials shot on the streets of Los Angeles fell last year to the lowest level recorded since tracking began in 1993, partly due to the writers strike but also because producers are moving work to cheaper locales.
Source: Los Angeles Times
Conversation of the Day: Citi--The Losses Keep Coming
Reader Samuel D. Bornstein writes: "The simple fact is that the underlying assets of the mortgage-backed securities and other related investments are the 'toxic' mortgages."
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Hot Topic on the Business Exchange: Yahoo
Yahoo has had a rough patch--and now it's getting a new CEO. Robert Hof and others are sharing their insights.
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