Pithaly

May 13, 2008 -- Banking analyst Meredith Whitney blasted Citigroup's turnaround plan yesterday, saying the financial giant is so deep in a black hole that even renown physicist Stephen Hawking could not help the ailing company.

"We wish [Citi's] management team all the best in their ambitious endeavors, but we fear [it] is past the point of fixing," quipped the Oppenheimer analyst known for her forecast that the company would slash its dividend.

The biting remarks, in the form of a research note to clients, came on the heels of Citi's long-awaited turnaround plan, unveiled by the bank's executive team on Friday.

In a nearly four-hour presentation with investors and analysts, CEO Vikram Pandit said the bank aims to get rid of $400 billion in noncore assets but otherwise rejected calls to boost the stock by spinning off units.

Instead, Pandit outlined plans to further integrate the conglomerate by doing away with overlapping technology systems, among other changes.

Whitney gave Pandit's presentation two thumbs down, saying it was "glaringly light on actual mechanics," and "almost identical to one given by former CEO Chuck Prince about a year and a half ago."

Prince, who was dethroned for his role in Citi's mortgage-related losses, stepped down days after Whitney issued her infamous prediction about Citi's dividend and placed an "underperform" rating on Citi's already battered stock.

Whitney agreed Citi's "antiquated and disparate" technology systems need work, but expressed skepticism about Pandit's plans to pull it off in tough financial times.

Similar efforts at JPMorgan Chase and Wells Fargo were "extremely disruptive and expensive," she said.

Whitney also predicted, in an interview with Bloomberg yesterday, that Citi will be forced to sell major businesses by the end of this year or early next year, and specifically pointed to Banamex, a Mexican bank Citi bought in 2001.

She also recommended investors sell their shares, which closed up a penny at $23.64 in New York Stock Exchange trading.

"The credit outlooks and the loss assumptions for banks across the board are way too low," Whitney said. "The outlook for earnings across the board is going to be much worse than people expect."

http://www.nypost.com/seven/05132008/business/citi_is_beyond_repair_110684.htm Read more on this article...

At first glance, you say "She cannot be a Wall street analyst!". She is, and a good one at that.

This is what she has to say today (17th March 2008):

"The problems at Bear Stearns may be unique, but U.S. financial stocks nonetheless have further downside of as much as 50%, according to Oppenheimer & Co. analyst Meredith Whitney."

“On the basis of book value, most banks do not appear expensive as they trade near price to book multiples of the 1990-1991 credit cycle,” she said in a note. “However on the basis of tangible book value, banks look expensive and are trading well above tangible book value.”

"Merrill Lynch, UBS and Citigroup will be the worst hit. Lehman brothers shares are already down 30 per cent in pre-opening trading."

Ms Whitney, Forbes’s second-highest-ranked stock picker for 2007, set off the biggest stock market decline in the US since August with a note on Citigroup.

The analyst who downgraded Citigroup, which led to a broad stock market sell-off in November, said she had received several death threats, the Times of London reported Saturday.

"Clients are not pleased with my call and I have had several death threats," she added. "But it was the most straightforward call I've made in my career and I am surprised my peer analysts have been resistant. It's so straightforward, it's indisputable." Read more on this article...