The Five Dumbest Things on Wall Street This Week
1. Knuckle Sandwich
Citi's (C) chief Chuck Prince is in a real pickle.
The Prince-must-go camp was emboldened Monday after Citi reported a 57% drop in third-quarter profit. Two days later, rival JPMorgan (JPM) made things worse for Prince by posting a rise in its own third-quarter earnings. It seems that debt-market problems took a much smaller chunk out of JPMorgan's hide.
Among Prince's loudest detractors has been Deutsche Bank analyst Mike Mayo. He downgraded the stock to sell last week after Prince again rearranged the deck chairs in Citi's executive suite. This week's earnings debacle gave Mayo an opportunity to wonder aloud how long Prince can stay at the helm of this sinking ship."Chuck said this was the year of no excuses," Mayo said on Monday's conference call. "You guys say the results are disappointing. So what are the repercussions at the level of the office of the chairman?" So far there are none, as Prince works furiously to save his own hide. He responded lamely to Mayo's fusillade Monday that "any fair-minded person would say that [the] strategic plan is working," Citi's lagging stock price nothwithstanding. Mayo pressed on, saying that "almost all the investors that I talk with feel like there needs to be more significant changes in terms of management." Struggling to shoehorn this diatribe into the question-and-answer format, he added, "So that is the data I am looking at. What are you looking at?" Prince surely has lots of data to look at. But after Monday's exchange, he may well have found himself focusing on the ground rules for future conference calls. What might Prince's strategic plan be there? Hold the Mayo. Dumb-o-Meter score: 93. Citi shares surged Wednesday morning amid chatter that the board would oust Prince, only to fall back after Citi said there was nothing to the rumor.
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