There’s nothing that markets seem to like these days more than multibillion dollar write-offs. Citigroup posted its second straight quarterly loss, hurt by more than $15 billion in write-downs and increased reserves for credit losses. The loss and the company’s revenue were both worse than expected, yet Citi shares rose strongly in premarket trading on hopes that the worst of the subprime crisis was past. In a pre-earnings interview with the FT, Chief Executive Vikram Pandit also vowed to slash the bank’s cost base by as much as 20 percent.
Royal Bank of Scotland is set to announce a rights issue to raise as much as $20 billion next week, an industry source told Reuters, in a radical u-turn for Britain’s second-largest bank and the first major capital hike for a British lender since the start of the credit crunch. It could also mark the end of an era for the bank’s well-respected chief executive, Fred Goodwin, whom analysts and shareholders say would face an uphill struggle to push through a hefty capital increase and remain in the job.
Halliburton is mulling a counterbid for Britain’s Expro International, sources close to the situation said on Friday, after the oil services company agreed to accept a 1.605 billion pound ($3.17 billion) bid from funds managed by private equity firm Candover and investment bank Goldman Sachs. However, Expro added in its statement that another party, which had been given access to its books, continued to conduct due diligence.
eBay will think about selling its Skype unit at the end of the year if it cannot find ways to make the Internet phone service aid its main online auction business. “If the synergies are strong, we’ll keep it in our portfolio. If not, we’ll reassess it,” Chief Executive John Donahoe told the FT. Since it’s been almost three years since eBay bought Skype for $2.6 billion, it’s hard to imagine much new emerging on the synergistic front.
** A South Korean consortium has agreed to invest $246 million in the El Boleo copper-and-cobalt project in Mexico by buying a 30 percent stake held by Canadian firm Baja Mining, a member of the group said.
** Husky Energy Inc said it has agreed to sell a half interest in an Indonesian natural gas field to China National Offshore Oil Corp for $125 million in order to speed its development.
** Nokia, the world’s top cellphone maker, said it is selling its subsidiary Identity Systems to U.S. data integration software provider Informatica Corp for $85 million cash.
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Citigroup Inc reported on Friday that it sustained a net loss for the 2008 first quarter of $5.1 billion and that it took $6.0 billion in pre-tax write-downs as a consequence of sub-prime mortgage losses. “Our financial results reflect the continuation of the unprecedented market and credit environment and its impact on our historical risk positions. During the first quarter, valuations of our sub-prime related exposures in fixed income markets and leveraged finance assets have further declined and credit costs in our consumer lending businesses have increased,” Citi CEO Vikram Pandit. Mr Pandit then sought to reassure investors that Citi is not entering into a period of permanent decline by adding the following comments: “Despite the negative factors in the broader markets, we continue to see strong momentum throughout the organization with robust volumes in many of our products and regions.” This statement, however, might not go far enough to satisfy the demands of angry shareholders, especially large institutional investors, for accountability from the bank’s Board of Directors. Just this past week, shareholders of Washington Mutual Inc forced the resignation of one WaMu Director and they were nearly successful in voting down the reelection of several other Directors to the WaMu board. The strife at WaMu could portend a similar fight at Citi.
- Posted by NewsVisual