Under Pressure, Citigroup Plans To Split Itself Up
Staggered by losses despite two federal rescues, Citigroup is accelerating moves to dismantle parts of its troubled financial empire in an effort to placate regulators and investors.
Under pressure from Washington and Wall Street, the financial giant plans to split itself in two, people with knowledge of the plan said Tuesday, heralding the end of the landmark merger that created Citigroup a decade ago.
Citigroup, which originally planned to sell businesses it no longer deems central in coming years, is speeding up the process to mitigate potentially billions of new losses, these people said. The government, which has twice supplied it with taxpayer support during the financial crisis, wants to avoid a repeat, said another person with knowledge of the situation.
But some analysts and investors questioned whether the plan, which included the announcement Tuesday of the hiving off of its prized Smith Barney brokerage, goes far enough to address Citigroup’s troubles.
“They have moved the chips around, but it’s the same game,” said Meredith A. Whitney, an Oppenheimer banking analyst who has been critical of the company. “They still have the same capital needs.”
Citigroup faces a devastating fourth quarter, with expectations of a $10 billion operating loss, and potentially billions more this year.
Harvard’s Palepu Caught Up In India’s Enron
Accounting professor Krishna G. Palepu, one of the leading lights at Harvard Business School, has long advocated sweeping reforms in the auditing business, but he was under no illusions that such measures would always succeed in preventing abuses.
“If there is a crook in the system,” Palepu said in a 1997 interview with the Globe, “it is going to be pretty tough to detect it.”
His words are proving prescient. Palepu, 55, resigned as a director of Indian-based technology services company Satyam Computer Services Inc. on Dec. 28, nine days before it touched off a raging business scandal in India and an embarrassment at Harvard Business School in Boston.
Last week, founder and chairman Byrraju Ramalinga Raju quit Satyam after admitting to fraudulent accounting — among other things, falsifying a cash balance of $1 billion — in a case that’s being called India’s Enron. Raju, an alumnus of a Harvard Business School executive education program, was arrested by Indian authorities last Friday, along with his brother B. Rama Raju, the Satyam managing director. They are currently being held in Chanchalguda Central Prison in Hyderabad, awaiting trial on criminal conspiracy and other charges.
Palepu, in a statement Tuesday, said he didn’t learn about the fraud until after he had resigned from the company. The scandal has rocked the Indian business community, caused anxiety among other Indian outsourcing companies, and angered Satyam investors.
Yahoo Hands the Reins to the Former Chief of Autodesk
In tapping Carol Bartz as Yahoo’s new chief executive on Tuesday, the company’s board has selected a seasoned manager and tough-minded technology executive who established Autodesk, the maker of design software, as a market leader and successfully steered it through a boom and bust cycle.
Bartz, who is well regarded in Silicon Valley, where she has a reputation as a decisive leader, will most likely need all the skills she developed during her 14 years as chief executive of Autodesk to turn around Yahoo. The Internet company is reeling after a turbulent year in which it conducted failed merger negotiations with Microsoft, saw its position in the search and online advertising business deteriorate and suffered two rounds of layoffs and a string of defections from its executive ranks.
In a conference call with analysts, Bartz, 60, who is executive chairman of Autodesk, acknowledged that Yahoo faced significant challenges but said she believed that the company’s strong brand and market position gave it a “huge opportunity.”
Listening to Schroeder: Scholars Decode ‘Peanuts’ Music
In a “Peanuts” strip from the mid-1950s, Charlie Brown walks through the first panel and finds Schroeder sitting in front of an adult-size hi-fi, his ear to the speaker. “Shh,” Schroeder says, “I’m listening to Beethoven’s Ninth.” Charlie Brown inspects Schroeder’s outfit. “In an overcoat?” he asks. Schroeder leans even closer to the speaker and responds, “The first movement was so beautiful it gave me the chills!”
In the world of “Peanuts,” of course, Schroeder was the Beethoven-obsessed music nerd who lost patience when Lucy interrupted his practice and who called time-outs as a baseball catcher to share composer trivia with the pitcher. Yet musicologists and art curators have learned that there was much more than a punch line to Charles Schulz’s invocation of Beethoven’s music.
“If you don’t read music and you can’t identify the music in the strips, then you lose out on some of the meaning,” said William Meredith, the director of the Ira F. Brilliant Center for Beethoven Studies at San Jose State University, who has studied hundreds of Beethoven-themed “Peanuts” strips.
When Schroeder pounded on his piano, his eyes clenched in a trance, the notes floating above his head were no random ink spots dropped into the key of G. Schulz carefully chose each snatch of music he drew and transcribed the notes from the score. More than an illustration, the music was a soundtrack to the strip, introducing the characters’ state of emotion, prompting one of them to ask a question or punctuating an interaction.