Citigroup Loss Drives Stocks Lower

123jump.com Staff
04 Mar, 2008
New York City

U.S. stocks fell at the opening after new worries related to Citigroup dragged banks. Citigroup fell 5% after a comment from Dubai controlled fund suggested that the bank will need more capital. Merrill Lynch estimated $18 billion in loan losses for Citi in the current quarter. Sanford Bernstein analysts lowered earnings estimates for several borkerage and banks.

[R]10:30AM New York – U.S. stocks decline on new worries related bank sector earnings.[/R]

U.S. market averages fell at the opening after more worries related to Citigroup and banking sector.

Citigroup worries drive bank stocks lower

Citigroup dropped 4% or $1 to $22.09 after Merrill Lynch analyst estimated a loss of first quarter credit write-down of $18 billion. According to a report on Bloomberg, analyst Guy Moszkowski estimated loan write-downs of $15 billion linked to subprime and collateralized loans and $3 billion from leveraged loans and consumer loans.

Intel lowered gross margins

Intel ((INTC)) dropped 9 cents to $19.91 after it lowered profitability estimate. Intel today lowered its first-quarter gross margin forecast to 54%, plus or minus a point, as compared to the previous forecast of 56%, due to lower than expected prices for NAND flash memory chips.

SanDisk ((SNDK)) dropped 45 cents to $22.61.

Construction spending declines

The Department of Commerce announced today that construction spending during January 2008 was estimated at a seasonally adjusted annual rate of $1,121.5 billion, 1.7% below the revised December estimate of $1,140.4 billion. The January data is 3.3% below the January 2007 estimate of $1,160.2 billion.

Tech Data earnings rise

Tech Data for the three-month period ended January 31, 2008 reached a fourth-quarter record of $6.5 billion, an increase of 5.9% from $6.1 billion in the prior-year period. Fourth quarter net-income totaled $50.2 million, or 92 cents per diluted share compared to net income of $36.1 million, or 66 cents per share from a year ago.

Net sales for the fiscal year ended January 31, 2008 were $23.4 billion, an increase of 9.2% from $21.4 billion in the fiscal year ended January 31, 2007. For the fiscal year ended January 31, 2008, on a GAAP basis, the company recorded operating income of $188.4 million, or 0.80% of net sales, compared with an operating loss of $4.2 million from a year ago.