BNET Daily Dispatch: Citigroup, Chevron, Palm, and Consumer Confidence
- After a three-month review, an anonymous source said that Citigroup is likely to cut 5 percent of its workforce, or 17,000 jobs. The largest U.S. bank seeks to lower annual expenses by $1 billion, and is eying the possibility of closing offices and moving some of its 337,000 workers to lower-cost locations. Banc of America Securities analyst John McDonald said the workforce reductions and office consolidations could save the company about $2 billion a year.
- Chevron's chemical business, Chevron Phillips, announced yesterday with Dow Chemical that the two companies will be joining forces in a 50-50 joint venture. Analysts view the alliance as a highly synergistic partnership, as Dow commands vast processing and distribution networks, while Chevron Phillips operates under two of the largest chemical suppliers, Chevron and ConocoPhillips. The joint-venture is expected to close in the second half of the year.
- Palm said yesterday that it looks forward to considerable growth, powered by increasing sales of its Treo mobile device in Europe and Asia. Palm chief executive, Ed Colligan, said "we think there is a big wave coming in this whole mobile computing revolution, which is becoming a bigger part of the overall mobile phone business. We have an enormous opportunity going forward." Palm faces competition from RIM's Blackberry device, and is threatened by the new Apple iPhone. Mr. Colligan cited company research forecasting the smartphone market at $36 billion in two years.
- Fears of recession and rising gasoline prices have prompted the lowest consumer confidence in 18 months, according to an indexed survey by Investor's Business Daily and TechnoMetrica Market Intelligence. Despite some positive economic indicators, like the 180,000 new jobs created last month, stock market woes and a struggling housing market have helped cast a negative light on the economy. The index reading fell last month from 50.8 to 45.5, a level indicating market pessimism.