a chi piace il rosso sangue

[Albatros]

MARKET SNAPSHOT: U.S. Stocks Slide As Countrywide Denies Bankruptcy Talk


By Kate Gibson

U.S. stocks fell sharply Tuesday as Countrywide Financial Corp. denied bankruptcy speculation and AT&T Inc. pointed to softness in its broadband and phone line business, pushing the Nasdaq Composite into an eighth day of losses.

"The rumor is that the mortgage lender will announce something this week. However, the company is out with comments this afternoon saying that there is no substance to the rumor," said Frederic Ruffy, an analyst for Optionetics.

The Dow Jones Industrial Average (DJI) fell 154 points to 12,673.5, with 24 of its 30 components declining, led by AT&T (T), down 5.2%.

Blue-chip financials weighed on the index, with American Express Co. (AXP) down 2.2 %, Citigroup Inc. (C), off 3.3%, and J.P. Morgan Chase (JPM) falling 4% .

"The financials are dragging everything down. This is the largest mortgage originator in the country, trading like it wants to go out of business," said Peter Boockvar, equity strategist at Miller Tabak.

Other blue-chip losses included shares of Microsoft Corp. (MSFT), off 2.5%, after the technology giant's announcement it would pay $1.2 billion to acquire Norwegian software developer Fast Search & Transfer. .

Broader indexes joined the drop. The S&P 500 (SPX) was down 14.19 points to 1, 401.99. The technology-laden Nasdaq Composite (RIXF), which lost ground the previous seven sessions, fell 28.3 points to 2,471.16.

"We started out with a rally in tech, and [an apparent] reversal of concern over economic growth, but at midday we're once again in a defensive position," said Owen Fitzpatrick, head of the U.S. equity group at Deutsche Bank.

Countrywide trouble

Shares of Countrywide (CFC) were down 29.5% in the wake of the company's denials and a New York Times story detailing the company's alleged role in the bankruptcy case of a homeowner in Pennsylvania.

"There is no substance to the rumor that Countrywide is planning to file for bankruptcy," the company said in a statement that was e-mailed to MarketWatch.

On the New York Mercantile Exchange, crude-oil futures ended up $1.24 at $ 96.33 a barrel. .

Elsewhere on the Nymex, gold futures surged to a new all-time high, with the contract for February delivery hitting $884 an ounce in electronic trade. .

Earlier on, equities investors paid little heed to the National Association of Realtors' report that pending home sales fell 2.6% in November and were down 19.2% in the past year. .

"Everybody has already written off the first quarter in terms of home sales and housing numbers. Nobody is giving the first quarter a chance for a turnaround anyway," said Marc Pado, U.S. strategist at Cantor Fitzgerald.

Volume on the New York Stock Exchange neared 1.5 billion shares, and declining stocks overtaking those declining 9 to 7. On the Nasdaq, more than 2.2 billion shares traded, and decliners outpaced advancing issues 5 to 4.

Active issues

Shares of Bear Stearns (BSC) fell 6.2% following reports that James Cayne would relinquish his chief executive's post but remain as chairman in the wake of losses and a distressed share price. .

The Wall Street Journal reported another management reshuffle at Barclays PLC (BCS) as the bank tries to recover from mortgage-related write-downs. Grant Kvalheim, a co-president of Barclays' investment-banking unit, is reportedly leaving.

Hit hard of late, shares of Starbucks (SBUX) rallied, gaining 9.3% after the coffee chain said former chief Howard Schultz would take the helm again at a time when Starbucks is facing slower traffic at U.S. stores. .

Ahead of the opening bell, KB Home (KBH) reported fourth-quarter losses of about $773 million. Its stock fell 8.8%. .

In a speech early Tuesday, Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said further cuts in interest rates probably won't be needed to heal the national economy. .

Cantor Fitzgerald's Pado, however, said another Fed rate cut is expected when central bankers meet later in the month.

"The Fed has got to move, and good, bad or neutral housing numbers aren't going to impact that; there's a chance for a 50 basis point move at the end of January," said Pado.

Overseas, Asian shares were mixed, with Tokyo ending ahead and Hong Kong falling. .

In London, defensive stocks rallied. .


i SUBPRIME mietono ancora....... e non e' finita' , anzi....

 

[Albatros]

ORA STANNO VENENDO FUORI GLI ALTARINI... quelli che ci hanno tenuto nascosto per non fare collassare di colpo il sistema, ma piano piano......



3RD UPDATE: Citigroup Swings To Loss On $18 Bln Charge; Cuts Payout 41%



By Greg Morcroft

NEW YORK (Dow Jones) -- Citigroup Inc., the nation's largest bank by assets, reported Tuesday its first quarterly loss since 1998, ending the suspense on Wall Street over just how badly the collapse of the mortgage industry and consumer belt-tightening would dent its balance sheet and reputation.

At the same time, Citigroup (C) slashed its dividend by 41% and raised more than $12 billion to bolster its capital position.

The company swung to a fourth-quarter loss of $9.83 billion, or $1.99 a share, from net income of $5.13 billion, or $1.03 a share, in the year-earlier period. Continued woes in the subprime-mortgage market caused the bank to book pre-tax write-downs and credit costs of about $18.1 billion.

Results for the latest quarter also included a $4.1 billion increase in credit costs incurred in Citigroup's U.S. consumer-loan portfolio.

"There was significant deterioration in consumer credit quality this quarter and the reserve build signals that tougher times are ahead in the U.S. consumer channel, which has accounted for 30% to 40% of Citi's recent profits," Goldman Sachs analyst William Tanona said in a research report Tuesday.

Citigroup executives said that the U.S. consumer is feeling the pain of the subprime crisis and the weakening U.S. economy and that it's boosted reserves to cover rising delinquencies and defaults on everything from credit cards to car loans.

"We had losses in our U.S. consumer business, up over $4 billion, and these numbers completely overwhelmed record performance in many, many of our other large businesses," CEO Vikram Pandit said Tuesday on a conference call.

In addition, the financial-services company said it's shoring up its finances by cutting its quarterly dividend to the tune of 41%, to 32 cents from 54 cents, and by divesting non-core assets and businesses.

Citigroup's shares, part of the Dow Jones Industrial Average, fell 3.2%, to $ 28.26 and helped weight down the broader market.

The shares are down 47% for the year and more than 30% since the end of October.

Tallying up the carnage

The company called the fourth-quarter results "clearly unacceptable." Indeed, revenue dropped 70% to $7.22 billion from $23.83 billion.

The firm took $5.1 billion in credit costs in its U.S. consumer business, driven primarily by higher charges to loan-loss reserves reflecting accelerating delinquencies and losses during the quarter in its U.S. mortgage portfolio and higher current and expected losses in its U.S. cards and personal loan portfolio.

"Consumer credit in the U.S. will continue to deteriorate," noted Gary Crittenden, chief financial officer.

"Amid increasing credit costs, balance-sheet restructuring, capital raises and an uncertain banking and capital markets environment, Citi's core earnings power remains unclear and we believe the stock will continue to trade on its book value," Banc of America analysts wrote Tuesday.

Citi cut its dividend to retain capital after huge write-downs from soured mortgage investments and bad loans.

The reduction marks a departure from recently departed CEO Chuck Prince's tenure, when Citigroup repeatedly said its dividend was secure. The company hadn't cut its dividend since it was formed out of the merger with Travelers.

Before that, as Citibank, the firm last cut its dividend in 1991, eliminating it completely at the height of that decade's real-estate crisis. It resumed payouts in 1994.

The bank also said it's raising $12.5 billion in new capital from a private placement and public offering of preferred shares.

Investors ponying up to bolster Citi's balance sheet include its former CEO Sanford Weill; Saudi Arabian prince Alwaleed bin Talal, who is a long-time investor; Singapore's government, and the state of New Jersey. The remaining investors in the $6.88 billion private placement include Capital Research Global Investors, Capital World Investors and Kuwait Investment Authority.

The privately offered preferred stock will have a coupon of 7% and a conversion premium of 20%, each subject to adjustment in certain limited circumstances. Each of the private investors has agreed to cap ownership at specific levels based on bank-regulatory and foreign-ownership provisions and other considerations.

"Each investor acted individually in making its investment; there has been no coordination or negotiation among these investors; and the entities have agreed not to act in concert with one another or others going forward," Citigroup said.

It added that none of the investors would have any special governance rights or any role in the management of the company, including no right to designate a member of the Citigroup board of directors.

Alwaleed confirmed his participation in Citigroup's$12.5 billion private placement and public offering of preferred shares. The size of Alwaleed's investment is in line with maintaining direct and indirect interest below the 4.9% ownership threshold, according to a release from his private office.

This is the second time that Alwaleed has contributed capital to strengthen Citigroup's balance sheet, after pumping $590 million into what was then known as Citicorp in 1991. Currently, Kingdom Holding, which is 95%-owned by Alwaleed, owns a 3.6% stake in Citigroup.

The new investments come after a $7.5 billion investment from Abu Dhabi's investment arm.

The funds will bolster Citi's balance sheet and help maintain regulatory- capital levels after the write-downs.

The company has made several attempts at restructuring after recent market turmoil forced it to re-evaluate its assets and liquidity in 2007. It last cut jobs in April, when it announced it would lay off of 17,000 workers.

In a note accompanying the earnings report, Citi also said it took charges in the quarter related to 4,200 job cuts. It didn't detail the cuts.

Also Tuesday, Merrill Lynch & Co. (MER) said it reached agreements with several investors, notably three foreign entities, to raise $6.6 billion. Korean Investment Corp., Kuwait Investment Authority and Japan's Mizuho Corporate Bank will receive mandatory convertible preferred stock for their combined investment.