Citi Cuts Do Not Inspire Confidence (Update)

Updated from 11:59 a.m. EST

Citigroup's (C Quote) deep cut to its global workforce is a much-needed move for the bloated giant, but investors and market observers are growing less confident management can steer the ship in difficult economic times.

Shares fell as much as 7% before rebounding slightly on Monday, after the New York banking titan said it was cutting approximately 53,000 more jobs over the coming quarters. Citi, which suffered massive losses from deteriorating debt, said total headcount is being reduced by 20% from its peak of 375,000 at the end of 2007; the company had already announced in October that it was eliminating about 22,000 jobs from those levels.

The plans, posted on the company's Web site, were discussed by CEO Vikram Pandit as part of the company's town hall meeting with employees in New York Monday. Ironically, the meeting was meant to rally beleaguered Citi employees.

"I have never liked the company," Cassandra Toroian, the president and chief investment officer of Bell Rock Capital, wrote in an email to TheStreet.com. "These cuts are a good idea. They are obviously bloated. [The] organization is so big they have no idea what they have all over the world. I think the company needs to be broken up and divested and shrink down to just a U.S. bank." Bell Rock does not own any shares of Citi.

Tom Hepner, an investment advisor at Ruggie Wealth Management, says the job cuts, while unfortunate, "demonstrates very strongly that Pandit has caught on."