There are companies that miss earnings expectations, and then there are companies that miss earnings expectations. Citigroup (NYSE: C ) just missed its earnings expectations by nearly 40%. As egregious as that number is, and as hungry people may be to immediately toss CEO Michael Corbat under the bus, instead take a deep breath and consider the facts.
It's good to know the king
Corbat became CEO less then three months ago, after Vikram Pandit was unceremoniously ejected from the position. And when I say unceremoniously, I mean unceremoniously. Pandit reportedly had no idea it was coming and was stunned.
The coup was engineered by Michael O'Neill, Citi's chairman of the board. According to The New York Times, there had been "long-simmering tensions" between Pandit and the bank's board, and with O'Neill in particular. Corbat was personally tapped for the job by O'Neill, and had a good reputation within the bank.
Corbat had been Citi's chief of operations in Europe, Africa, and the Middle East, and has been with Citi for almost 30 years.
Judge not, lest ye be judged
So Corbat gets a pass, if for no other reason than the poor guy just started his job. I can't speak for anyone else, but I'm essentially clueless for the first six months of any new job. Now, Corbat is a veteran banker, as well as a veteran Citi employee, so he should be expected to come up to speed perhaps more quickly than a complete newbie, but in my book, three months still qualifies as the honeymoon period for anyone in any new position.
To boot, analyst expectations are just that: expectations. Hopes. Dreams. Desires. Best armchair guesses. Stocks rise and fall on them, but in reality they aren't the end of the story. In the fourth quarter of 2011, Citi's earnings per share were $0.41; for the fourth quarter of 2012 year they're $0.69. And on an underlying basis, total revenue rose 8% year over year.
Foolish bottom line? If you're going to ding Corbat on the earnings miss, make sure you also give him a hearty slap on the back for coming through on increased revenue and profit. Or better yet, withhold your judgment until at least the end of the first quarter of 2013.
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