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Monday, September 29, 2008

Citi CFO Sees Drop In Q3 Net Income, Versus Previous Quarter

Alistair Barr

MarketWatch Pulse

SAN FRANCISCO -- Citigroup Inc. Chief Financial Officer Gary Crittenden said on Monday that third-quarter net income will likely be lower than the profit the giant bank generated during the second quarter. The continued deterioration in consumer credit will have a "significant" impact on third-quarter results, Crittenden explained during a conference call with analysts. Still, third-quarter net income will be higher than during the first quarter of 2008, he noted. Total credit costs will be about $9.8 billion in the third quarter, up from the second quarter. Write-downs on exposures including mortgages and leveraged loans will probably be $1.5 billion, down from previous quarters. Write-downs on SIV assets will be higher at roughly $1.7 billion, Crittenden forecast. There will also be about $2 billion in losses related to credit card securitization, he added. Expenses will have fallen by about $1 billion during the third quarter, with the reduction of roughly 10,000 staff, the CFO said.

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Word of the Day

Same-Store Sales

Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.

So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.

Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.