Citigroup Inc shares have been languishing around $4.00 per share, on worries that the company doesn’t have a well defined enough strategy to execute high profit margins. There is also grave concern that since the company is hoarding so much cash, the folks at C really don’t have a plan for getting a high return on capital.
A report by Calyon Securities analyst Mike Mayo two weeks ago also shook confidence in the firm. He thinks that Citigroup faces possible fourth quarter write-downs of $10 billion.
Despite receiving criticism about his viewpoint, Mayo reiterated his feelings on Thursday.
“Based on the amount of negative evidence that exists, we believe a write-down cannot be ruled out and, because the bank has cumulative losses in recent years, it has to shoulder a particularly heavy burden,” he wrote.
Mayo is basing his analysis on Citigroup’s position with deferred tax assets.
When the report first emerged in October, it was shrugged off by C officials.
“We have no idea how any analyst could have come to this estimate,” said company spokesman Steve Cohen at the time.
Now some investors might be worrying just what problems are right below the surface as Citigroup attempts to repay the government for its huge bailout funds and to return to profitability. There’s no question the company is under more public scrutiny that ever before, so any write downs they make for tax purposes will be closely scrutinized.
C is still facing enormous pressure due to the depressed housing market and increased unemployment. They have amassed a staggering $240 billion in cash as the prepare their loan loss reserves for more stunning losses. Cash hoards help with stability, but do little to increase growth.
If the economy remains stagnant, it’s hard to picture Citigroup stock going much higher in the near term. But for many people holding since $2.80 or so a share, it’s probably worthwhile to continue to hold, unless extremely bad news hits the wires.
In a couple signs that the housing market is still far from fully recovered, Fannie Mae has asked the Fed for $15 billion more in funds to stay alive at the same time they announced plans to allow borrowers in foreclosure to remain in the house by making lease payments.
The recent news comes as Fannie [...]
A $6 billion payment made by Intel Corporation to Dell Inc. over a five year period that ended in 2007 has resulted in the chip maker receiving Antitrust charges from the New York Attorney’s General Office.
The payments were made as part of a program called ‘MOAP’ (Mother of all Programs) and later ‘MCP’ [...]
Soon they won’t have Kenneth Lewis to kick around any more.
Lewis, who has been CEO of Charlotte-based Bank of America will step down on December 31, 2009. He’ll take $68.8 million with him. That’s money he’s accumulated in 40 years with BAC and its predecessors. Despite the fantastic personal financial [...]
Like a lot of shotgun marriages, the Bank of America Merrill Lynch merger has faced a lot of hurdles. Bank of America CEO Kenneth Lewis has been forced to answer questions about the deal several times, including for the Attorney General of New York on April 23, 2009. He said the public had [...]
Citigroup Inc shares have had a rocky September, but considering how much they had already runiup, that’s not a complete surprise. For people thinking of investing in C shares, the outlook seems relatively positive. The company, although still deeply troubled in many ways, shows encouraging signs as well.
First, let’s look at the bad news. [...]
Leaders of Cadbury PLC plan on defending against the $16.7 billion offer from Kraft Foods. The reason, simply, is they think their company is worth more money. Cadbury is the owner of a number of iconic brands which sell well in many parts of the world.
For Kraft the merger would make [...]
Bank of America is doing its part to put the Merrill Lynch bonus issues behind it. The Charlotte, N.C. based bank has paid $150 million to settle a lawsuit brought against it by the SEC. The company has been under heat since late last year due to $3.6 billion in bonuses paid out [...]
Las Vegas Sands, which has proven itself to be one of the most resilient stocks going is up on news about a listing on the Hong Kong Stock Exchange.
LVS has had to come up with a financing plan for its giant Macau casino, which needs $2 billion more to be completed. A recent series [...]
Citigroup Inc has reacted to changes in credit card laws by coming up with some aggressive new ways to earn money from existing card holders.
Credit card issuers are not a passive group, and C is no exception. Credit card lenders have been warning that new credit card laws will make it tougher [...]