Citigroup Digs Deep, Google Rides High
Citigroup reports a $5.11 billion loss in its first quarter. Google surprises investors with a $1.31 billion gain. And high prices for organic foods are making health-conscious consumers rethink their priorities.
NEWS AT A GLANCE
Citigroup loses $5.11 billion
Citigroup, the largest U.S. bank, posted a $5.11 billion quarterly loss, its second in a row, after writing down at least $15 billion in assets tied to mortgages and leveraged loans. Revenue fell 48 percent. (MarketWatch) The results were worse than analysts expected, but Citigroup shares rose in early trading. (Reuters) CEO Vikram Pandit, nearing the end of a comprehensive companywide review, has replaced his chief risk officer, cut 6,000 jobs, and replenished capital reserves to return the bank to fiscal health. “It was a difficult quarter,” said Peter Kovalski at Alpine Woods Investments, but “Pandit is doing what needs to be done,” given the tough market. (Bloomberg)
Google beats expectations
Google reported a 30 percent rise in quarterly profits, to $1.31 billion, easily topping analysts’ forecasts. Google said it didn’t see any impact yet from the U.S. economic slowdown, but much of its growth came from a strong push into international markets. For the first time, more than half of Google’s revenue came from outside the U.S. (AP in Yahoo! Finance) Google’s stock, down sharply this year, shot up 18 percent in extended trading, to $529.38 a share. “It’s a good time to be a Google bull,” said analyst Colin Gillis at Canaccord Adams. “The boys delivered.” (Reuters) If Yahoo! similary beats expectations next week, analysts say, it could help it demand a higher bid from Microsoft. (BusinessWeek.com)
RBS exploring large stock sale
Royal Bank of Scotland, the U.K.’s No. 2 lender, said it is considering selling shares to raise capital, reversing earlier assertions that it didn’t need fresh capital. RBS’s reserves have been depleted by more than $5 billion in writedowns and its part in the $114.5 billion acquisition of Dutch bank ABN Amro. (Bloomberg) The details of the rights offer are expected next week. Analysts said RBS could bring in as much as $18 billion. “After all the denials by RBS that there was a need for any capital raising initiatives, it’s unlikely that the market will take this as a positive,” said Martin Slaney at GFT. (Reuters)
Iceland’s credit freeze
Iceland is a country of extremes, and it is now on the verge of swinging from a period of remarkably robust growth to its first recession since 1992. The trouble started in Iceland’s banking sector, which holds assets worth more than 10 times the country’s GDP. Questions about their liquidity started hitting the banks early this year, even though they never bought the risky U.S. mortgage-back securities that got other countries in trouble. Icelanders and outside investors agree that things are getting bad, but disagree on why, with the foreigners arguing that Iceland is due for a steep correction and locals alleging market manipulation by speculators. (The New York Times, free registration)
THE WEEK'S AUDIOPHILE PODCASTS: LISTEN SMARTER
MOST POPULAR ON THE WEEK
- Why Mitt Romney is perfectly poised for a comeback in 2016
- The mystery behind China's aggressive push into space
- What would a U.S.-Russia war look like?
- The best places to find love — and lust — according to science
- Here's the schedule very successful people follow every day
- Why is the West so afraid of Islam?
- 7 grammar rules you really should pay attention to
- Why GOP reformers are bound to fail
- The 5 best and worst states for a well-lived life
- Don't vote for Andrew Cuomo
Subscribe to the Week