Archive for January, 2009

Citigroup names Parsons chairman; Bischoff retires (Reuters)

Wednesday, January 21st, 2009 | Finance News

NEW YORK (Reuters) –
Citigroup Inc (C.N) named former Time Warner Inc (TWX.N) Chief Executive Richard Parsons as its chairman, the latest high-level personnel change to shake a U.S. bank clobbered by the credit crunch.

Parsons, 60, has been a director since 1996, a period marked by rapid growth followed by a precipitous decline. He succeeds Sir Win Bischoff, 66, who will retire from Citigroup later this year.

Bischoff, a top executive at the bank in Europe, was seen as a surprise choice when he was brought in as chairman of the bank in December 2007. Critics widely viewed him as ineffective, failing to take charge of a board that needed greater direction to address the bank's problems.

He became chairman when Vikram Pandit was named chief executive after briefly serving as acting chief executive in the weeks after Charles "Chuck" Prince resigned.

Bischoff's departure was considered a near certainty, following an $18.72 billion net loss in 2008, including $8.29 billion in the fourth quarter.

"(T)he last 15 months have not been the easiest of my 44 years in banking," Bischoff said in a memo to employees.

He said he had "always envisioned a limited tenure."

Parsons said in a statement that further board departures were anticipated, adding he will reconstitute the board's membership "as quickly as possible."

Parsons is an independent chairman. His appointment signals that the board may assert tighter oversight, said Jay Lorsch, a professor at Harvard Business School.

"Financial companies, especially Citigroup, have a complex set of problems and boards need leadership to figure out what needs to be done," Lorsch said.

Parsons previously served as chief executive and chairman at Time Warner from 2002 through 2007 and chairman in 2008.

He stabilized the company after its 2000 merger with America Online, widely considered among the most disastrous corporate marriages in history and smoothed over in-fighting among different divisions.

But in his 5-1/2 years running the company, shares dropped 12.4 percent, while the Standard & Poor's 500 (.SPX) rose 34.6 percent, Reuters data show.

Parsons has also been chairman and chief executive officer of Dime Bancorp Inc, and has advised President Barack Obama.


Citigroup's losses have stemmed from tens of billions of dollars of writedowns on everything from subprime mortgage bonds to loans funding leveraged buyouts.

Executives have struggled to right the ship and the bank last week said it will move assets it wants to sell or wind down into a separate unit. It also agreed to sell a controlling stake in its Smith Barney retail brokerage to Morgan Stanley (MS.N).

Bischoff will stay on the bank's board until its annual meeting later this year.

His departure follows the recent exit of former U.S. Treasury Secretary Robert Rubin, a senior counselor to the bank, who this month also said he does not plan to remain on the board.

Citigroup shares closed Wednesday up 87 cents, or 31.1 percent, at $3.67, amid broad gains in the banking sector. They remain down 88 percent from their 52-week high set last Feb 1. The bank announced the board changes after U.S. markets closed.

(Additional reporting by Yinka Adegoke and Juan Lagorio; editing by Carol Bishopric and Andre Grenon)


J Crew shares up after Obamas don its clothing (AP)

Wednesday, January 21st, 2009 | Finance News

WASHINGTON – Share of J. Crew Group Inc. jumped Wednesday after news spread that many items worn by the first family during this week's inauguration events were from the national retailer.

President Barack Obama wore a white satin bow tie to all the Inaugural Balls Tuesday night. First lady Michelle Obama wore J. Crew gloves, a sweater and skirt from the company to different events. And daughters Malia and Sasha wore coats, dresses and other items from the retailer to various occasions celebrating their father's inauguration.

While the items were made specifically for the Obamas, J. Crew said customers can see highlights or similar items in upcoming seasons.

"We are thrilled to be a part of this historic event," Frank Muytjens, vice president of men's design at J. Crew said in a statement.

Shares of J. Crew jumped 96 cents, more than 10 percent, in trading Wednesday to close at $9.99.


Intel to shut sites and cut up to 6,000 jobs (Reuters)

Wednesday, January 21st, 2009 | Finance News

NEW YORK (Reuters) –
Intel Corp (INTC.O) said on Wednesday it would close manufacturing plants in Malaysia and the Philippines, as well as its only remaining factory in Silicon Valley, cutting as many as 6,000 jobs.

The announcement comes a day after the world's largest maker of microprocessors used in personal computers slashed prices on a number of its chips and a week after it reported a decline in fourth-quarter revenue.

Intel said it would close two assembly test facilities in Penang, Malaysia, and one in Cavite, Philippines.

It will also halt production at a wafer fabrication facility in Hillsboro, Oregon, as well as its Santa Clara, California plant -- a factory connected to its headquarters and the only one left in Silicon Valley.

The actions will result in a reduction of 5,000 to 6,000 jobs, Intel said. It ended 2008 with around 84,000 employees.

Not all cuts at the affected plants will lead to job losses and some workers will be offered positions at other facilities, it said, adding that the restructuring will take place between now and the end of 2009.

"It's not a surprise given that their first quarter is probably going to be challenging, and they're trying to do what they can to cut costs in places that make sense," said Taunya Sell, an analyst at Ragen Mackenzie, a division of Wells Fargo.

Intel said it was not halting production at any of its more advanced factories.

Intel shares rose about 1 percent to $13.40 in after-hours trading, after rising 3.11 percent to close at $13.26 on the Nasdaq stock market.

Last week, Intel said its fourth-quarter revenue fell 23 percent from the year-ago period and profit tumbled 90 percent. It also held back on giving detailed quarterly forecasts, citing economic uncertainty.

Analysts have been wary about Intel's outlook for the year as chip sales slide. PC makers and other technology companies have been trimming inventory and cutting back on purchases.

Intel also faces competition from new, cheaper chips made by Advanced Micro Devices Inc (AMD.N).

On Tuesday, Intel said it was lowering prices on some of its processors, including price cuts of up to 40 percent on some of its higher-powered, faster quad-core chips.

AMD said earlier this month that it expected to post additional restructuring charges for fiscal 2008 and 2009.

(Additional reporting by Robert MacMillan; Editing by Andre Grenon)