Wall Street loves it when you cut costs, Tim says, and he thinks Citi has the right strategy as it continues to grow. The first batch of firings won’t be surprising and will probably come from profit centers that are no longer profitable, and cost centers that have been “modernized out of relevance,” he says. The employees will know it’s coming and, unfortunately, these things are often long overdue. A restructuring plan will likely focus on moving into sectors that are more profitable like alternative asset space and proprietary trading – boats that Citigroup has been missing, Tim says.
But Jeff doesn’t think it matters how many jobs Prince cuts, unless he has a plan for what to replace them with - and he isn’t convinced Tim’s idea of a plan is enough to win the Street over.
It’s great to focus on the expense-side, Guy says, but they’re going to have to focus on the revenue-side at some point.
Eric says the best play is to just take money overseas. Citibank is stuck, he says, and the company’s expenses are simply increasing too fast. Eric would rather own National Australia Bank (NAB) or Westpac (WBK), two $50 billion banks that are doing great, or even Deutsche Bank (DB).
Guy would rather be in Bank of America (BAC) and Tim would own Citi over Deutsche, but his pick is the Mitsubishi Financial Group (MTU).
Goldman Sachs (GS) and Wells Fargo (WFC) are two banks that are already doing what Citi needs to do, Jeff says, and that's where he'd rather be.
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On APR 10, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders:
Bolling Owns (XOM) (EP), Gold, Silver
Strazzini Owns (CBS), (T), (VZ), (YHOO), (MER)
NBC Universal Is The Parent Company of CNBC
LaVorgna Is Deutsche Bank's Chief U.S. Economist