Market briefing---Suzy (medium)
Citigroup---Su (fast)
NYSE---Deb (fast)
>> good afternoon and welcome to “world financial report”.i’m suzy assaad. thank you for being with us today. our top story is the departure of sandy weill as c.e.o. of citigroup. he’s going to be stepping down as chief executive at the end of the year. but he will stay on as chairman of the board. the 70-year-old weill hand picked his successor, chuck prince, who has worked for weill for about 20 years. su keenan has more on the man who will lead citigroup’s future.
>> suzy, 53-year-old charles prince known as chuck, is described as a top attorney and a close confidante of sandy weill, a man who shares his vision for the company. he appears to have a sense of humor. on this morning’s conference call he said, “we are going to have sandy’s “don’t screw up” model on the wall. prince said he was both excited and terrified. he was asked on that call whether he would do anything differently than will who has been his mentor. he said, “i hope not. his success is pretty good. we are comfortable with the trajectory of the company,” and he went on to say, “i don’t think you should look for a lot of dramatic changes.” the news did bring changes to the stock price. shares fell nearly 3% by the close. david nelson who helps manage $200 billion at legg mason’s fund management including citigroup shares, says he tends to read that as investor confusion. when people are confused, they tend to sell and not to buy, quote/unquote. that said, bank of new york’s large-cap growth fund which holds 300,000 citigroup shares says, “we are pretty comfortable with prince, a sentiment echoed by other investigators. nmpts familiar with his history saying he’s the ultimate insider and astute reader of fine president clinton e led to a settlement of the conflict of interest charges against citigroup that resulted in a $400 million penalty. jeff kleintop at p.n.c. bank says prince’s legal and regulatory expertise are key.
>> that’s clearly important in running a company as diverse and complex as citigroup. so being the man just behind the scenes and the man who really understands what causes citigroup to function at the microlevel is critical in the role as a c.e.o. of such a diverse and important firm. i think what’s interesting is this early sign of perhaps a progression among not only wall street firms but firms in general to place a risk management officer or even an attorney, a lawyer, as the head slot in the firm.
>> a lawyer at the top slot of citigroup. michael stad who helps manage more than $30 million of citigroup shares at wells capital management said prince has actually been running the corporate and investment bank for a year now. he says, “if the results are anything to go by, he’s done a fantastic job.” he went on to say, “i don’t think we need to worry.” prince officially takes over as c.e.o. at the end of the year.
>> all right. thank you very much. su keenan with that report for us. in the meantime sandy weill, who built citigroup into the world’s biggest financial company, he spent more than four decades on wall street. take a look at the history, if you will, of this man. he was born in brooklyn in 1933, then weill graduated from cornell. then he got his start working as a runner for bear stearns earning $35 a week. by 1960 he had already co-founded his own firm. over the next 20 years the small brokerage firm would make 15 acquisitions including buying shearson, a company twice its size. in 1981 weill’s firm was acquired by american express for almost a billion dollars. in 1985 weill resigned under pressure as president of american express. he reemerged in 1986. he bought commercial credit. and in 1988 he acquired primerica and its smith barney brokerage. in 1993 weill bought shearson from american express and completed a purchase of travelers insurance taking the travelers name. in 1997 travelers bought solomon brothers for $9 billion. weill’s biggest deal came in 1998 with the $70 billion merger between travelers and citicorp forming the nation’s biggest bank. finally in the year 2000 john reed stepped down from citigroup after a power struggle with weill. earlier this year citigroup agreed to pay $400 million to settle charges of misleading investors because of biased research. while we. ll was never personally charged regulators found he asked jack grubman to reconsider his rating of at&t which later gave business to citigroup. we are going to bring you two different viewpoints on the moves at citigroup. we’ll have a round table discussion coming up in five minutes’ time from now. we have james zel mon of sea cliff capital, nel minnow of the corporate library coming up at 5:12 new york time. join us for that. in the meantime citigroup was the biggest drag on the dow today but intel’s earnings could not help turn the market around. deborah kostroun is at the big board with more on today’s session.
>> suzy, so many stores in -- stories in today’s session with citigroup on onen and intel’s earnings. then we had alan greenspan’s testimony. francis trehan, bear stearns equity strategist talking about that, saying greenspan’s testimony to the house committee was mostly bullish for stocks . however, he says greenspan says he’ll keep interest rates low to foster the economic growth. he says the upward trajectory of stocks could very well continue in the second half of 2003. but probably at a little slower pace. in fact he expects the s&p 500 to be up 13% this year, and he also says the next leg of the rally may start in the next several weeks. he’s predicting the s&p 500 will end the year at 10:50, or about 56 points higher than today’s close of 994. getting to some of the things that we are looking at in today’s session, today’s news about sanford weill stepping down overshadowed the news we got yesterday about citigroup buying sears credit card for $6 b sears focusing on some of their core business. they’ve been losing sales on the appliance side to home depot, clothing sales to kohl’s. now they are going to get that influx of about $6 billion to focus in on more of their core business in their retail area. also as the amex broker dealer index started out the day hitting a 52-week high, seeing a turnaround. one of the turn around stocks was j.p. morgan. j.p. morgan on the day, they actually had their earnings. and j.p. morgan said many of the same things that citigroup said earlier in the week when they reported their earnings on monday. that was that their auto lending business, their mortgage business performing quite well, and so that’s one of the reasons that we did see j.p. morgan turning around a little bit hitting that 52-week high a little earlier in today’s session. also the carmakers, ford the focus in today’s session. and that mainly as they reported a profit in the second quarter falling 27%. in fact, ford forecasting a third quarter loss of 15 cents a share, a little wider than the 12 cent forecast, one of the reasons that we did see ford a little lower. back to you in the studio, suzy.
>> deb, thank you very much for the update there. other news going on in the extended hours session right now. i.b.m. said that their second quarter profit and their revenue rose, and it was helped by the software and services acquisitions, also by the sale of an unprofitable disk drive unit. net income coming in at 1.7 billion. that’s 95 cents a share. excluding some items, their earnings actually met the street’s expectations. their sales were higher by 10%, rising to $21.6 billion. their revenue was boosted by the buying of rationale software and pricewaterhouse coopers’ business consulting unit. investors say even with the acquisition i.b.m.’s results are saying global spending on information technology may be rebounding. take a look at how the stock is doing right now. 35 cents higher, 35 percentage points higher. but not sure if that is actually the extended hours or not. there you go. there is the extended hours action. the stock is down as you can see by 2 1/3 percent. it has resumed trading in the afterhouse session, after the gain you saw of about 1/3 of 1% earlier today. news out of thed quarter earnings and a reduced forecast for the full year sending shares of kraft food down 6% in the extended hours. their net income increased to almost a billion dollars or 55 cents a share. analysts were looking for them to earn 58 cents a share. sales companies, sales cloudy down about 4.4% coming in less than expected. the company reducing its annual earnings to between two to 2.05 a share. still to come we are going to have that round table discussion coming up on citigroup. we are going to be joined with two men with two very different views on sandy weill and on his successor.
