Wednesday, October 17, 2012

News Recap: International Business Machines Corp.(NYSE:IBM), Citigroup Inc.(NYSE:C)

Citigroup Inc.(NYSE:C)’s new CEO says that there will be no change in the direction of the bank on Vikram Pandit’s stepping down.

The new CEO, Michael Corbat held a conference call with analysts and reporters in which he praised Pandit for leading the company in the financial crisis in 2008 and the recession that followed. "Today's changes do not reflect any desire to alter the strategic direction of Citi, which we believe to be the right one," he said.

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Pandit’s departure on Tuesday was a surprise for the Street and led to a lot of speculation on the reasons. However Citi board chairman, Michael O’Neill said the decision to leave was Pandit’s own.

Shares of Citigroup rose another 1.50% after gaining 1.60% in yesterday’s session.

International Business Machines Corp.(NYSE:IBM) declared its results for the third quarter on Tuesday. While revenue fell below expectations thanks to jittery customers and a weak Euro, the net income of the company was steady.

In a conference call with analysts, Chief Financial Officer Mark Loughridge said that the third quarter which started in July had begun with a bang but the last month of the quarter, September, turned out to be a challenging month.

On declaration of the results, shares of the company fell $9.65 or 4.60 percent to $201.39 in the opening session.

IBM made profits of $3.8 billion in the quarter which works out to $3.30 a share. In the corresponding quarter last year, the company’s net income was the same. But then, the earnings per share were 14 cents lower than this year because of greater outstanding stock.

Revenue for the quarter fell 5 percent to $24.7 billion. This missed analysts’ expectations by $700 million. Although analysts had taken into account the strengthening dollar when arriving at the estimate, they had underestimated the impact on company revenue.

The results included a onetime charge of $160 million because of a UK court’s decision that will result in higher costs for the company when paying pension to some of its retired employees.

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