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โพสต์แล้ว: พุธ มี.ค. 11, 2009 9:35 pm
Why the Pandit Memo Is Meaningless
From The Business Insider, March 11, 2009:
It's nice to get a rally for a change, and the idea that the words "bank" and "profit" could be written in the same memo is astounding.
But the idea that the memo communicated anything meaningful, or that solvency is assured is hokum. Lex has a good take, as always:
But investors should not lose their heads. The headline-grabbing revenue number, of course, does not include costs or writedowns. Besides, Citi exceeded $20bn in adjusted revenues for eight quarters up until the end of September. Even in the nightmare final quarter of last year, revenues excluding writedowns were still a respectable $13.4bn. So Citi having a bumper top line is nothing to get excited about. That “profitable” remains unquantified gives no comfort as to what extent writedowns have eaten into that haul. That is the problem. In volatile markets, flow businesses such as foreign exchange or cash equities will always do well.
ZeroHedge has some further thoughts:
Another question is how much of this blockbuster revenue was due to the Smith Barney brokerage: Citi was forced to sell half of this unit about a month ago, and thus any associated revenues have to be chopped in half for a true pro forma representation, else Citi is double counting the income statement and balance sheet benefits. As more impairments have to be taken, higher and higher tranches of the capital structure will likely become equitization candidates and thus sources of incremental stock dilution.
Finally, we like AngryBear's suggestion that if people are believing anything a bank CEO says, it's official that capitalism can't be saved from investor idiocy. Their words!
http://finance.yahoo.com/tech-ticker/ar ... ers=c,^dji
From The Business Insider, March 11, 2009:
It's nice to get a rally for a change, and the idea that the words "bank" and "profit" could be written in the same memo is astounding.
But the idea that the memo communicated anything meaningful, or that solvency is assured is hokum. Lex has a good take, as always:
But investors should not lose their heads. The headline-grabbing revenue number, of course, does not include costs or writedowns. Besides, Citi exceeded $20bn in adjusted revenues for eight quarters up until the end of September. Even in the nightmare final quarter of last year, revenues excluding writedowns were still a respectable $13.4bn. So Citi having a bumper top line is nothing to get excited about. That “profitable” remains unquantified gives no comfort as to what extent writedowns have eaten into that haul. That is the problem. In volatile markets, flow businesses such as foreign exchange or cash equities will always do well.
ZeroHedge has some further thoughts:
Another question is how much of this blockbuster revenue was due to the Smith Barney brokerage: Citi was forced to sell half of this unit about a month ago, and thus any associated revenues have to be chopped in half for a true pro forma representation, else Citi is double counting the income statement and balance sheet benefits. As more impairments have to be taken, higher and higher tranches of the capital structure will likely become equitization candidates and thus sources of incremental stock dilution.
Finally, we like AngryBear's suggestion that if people are believing anything a bank CEO says, it's official that capitalism can't be saved from investor idiocy. Their words!
http://finance.yahoo.com/tech-ticker/ar ... ers=c,^dji