Devoted to Managers and those that seek to improve their management skills

Citigroup Inc. (C) has been open for business for 196 years, and this quarter they posted the largest losses in their history, ending at almost $10 billion. Write downs on subprime mortgages during that period reached a staggering $18 billion.

Even though the company said in a statement on November 4 that they wouldn't be cutting the dividend, the quarterly results forced their hand, and they cut it by 41 percent, and will save them around $4.5 billion.

The subprime mortgage writedowns are almost twice the number the company projected in November, and they've set aside $5.2 billion to cover loan losses in its U.S. consumer unit. That's close to 5 times what they set aside last year.

Revenue for the company dropped 70 percent from last year, finishing at $7.22 billion. At the same time, operating expenses surged by 18 percent to reach $16.5 billion. Surprisingly for the entire year they were able to record a $3.62 billion profit, but still 83 percent below its 2006 numbers.

"They've got themselves in a deep, desperate hole and it's going to take them all of 2008 to work their way out of it,'' Jon Fisher, who helps manage $22 billion at  Fifth Third Asset Management, said in an interview. "There are probably issues on their balance sheet that the management team, who's only really been running the company for about a month, doesn't even know about."   

For now all the new management team can do, because of the short time running the company, is what they're doing. They've got to plug the leaks to get things more on an even keel. Cutting expenses everywhere they can is the first step, which they're doing.

From there they've got to get a handle on what is on the balance sheet; not an easy thing to do in this gargantuan company. Once they do that, they can start to make informed decisions on where to go. At this time they are really flying blind, other than the obvious subprime mortgage numbers.

The other thing they needed to do, and have done, is secure enough working capital to take them through the murky waters until they are able to take steps to turn things around.

There are no short-term solutions for the company. It'll take all of this year to get things righted and work their way through the problems. Some of the problems, as mentioned, aren't even known yet. All they can do now is bail water out of the sinking boat to keep it afloat, while they look for other holes in the bottom they haven't discovered yet.