As some have likely noticed, there has been a renewed discussion lately on the relative merits of corporate diversification. The topic has been tossed around from time to time, with some arguing that diversified sources of revenue provide a certain margin of safety while others contend that simplicity is the best approach. Tom Gardner, the latest person to chime in on the subject, recently made a compelling case that one of the principal common denominators of Hidden Gems is a laserlike focus on developing a single competitive advantage.

I suspect that former Charles Schwab (NYSE:SCH) chief David Pottruck has a few thoughts on the topic after being forced from his job for steering the discount brokerage pioneer into costly new ventures that were roundly criticized. Yet it is precisely diversification into salty snacks and noncarbonated beverages that has given Pepsi (NYSE:PEP) the edge over Coca-Cola (NYSE:KO) lately.

As with many things, the truth probably lies somewhere in the middle. After all, while some companies such as Starbucks (NASDAQ:SBUX) and McDonald's (NYSE:MCD) have built an empire on a single concept, others such as General Electric (NYSE:GE) have thrived by offering disparate products ranging from diagnostic imaging equipment to jet engines in 11 distinct business segments. Though, of course, companies the size of GE are quite a bit larger and have more resources than those that lie in the small-cap fields where Hidden Gems are mined.

Yesterday, Citigroup (NYSE:C), the nation's largest financial institution, reported third-quarter results that -- for better or worse -- are derived from a broad range of products and services. By broad, I mean both retail and institutional customers, consumer banking, commercial banking, and investment banking. By broad, I mean investment management and comprehensive financial planning through Smith Barney and a complete suite of insurance products through Travelers. I mean mortgage operations, trust & fiduciary services, pension administration, consumer loans, debt and equity trading, asset management, and credit cards. I mean more than $1.4 trillion in assets, with 200 million global customer relationships in more than 100 countries.

The sum total of all these operations was a 13% improvement in quarterly earnings to $5.31 billion, ($1.02), record results that CEO Charles Prince said "demonstrate the benefits of our diversified business platform." As with Bank of America, consumer banking drove most of the growth, offsetting relatively weak investment banking activity. Consumer-business net income rose 23% to $3.07 billion, driven by gains of 35% in consumer finance, 29% in credit cards, and 15% in retail banking. Credit card income of $1.2 billion benefited from the recent acquisitions of Sears' and Home Depot's credit portfolios.

Other segments saw mixed results. Corporate and investment banking revenues inched up only 1% to $4.78 billion, as declines of 12% in fixed income revenues and 14% in equity revenues kept the capital markets unit in check. Private client services was also disappointing as net income fell 5% on a 12% drop in transaction-based commission revenues. Recurring fee-based revenues rose 16%, however, and a 73% surge in life insurance and annuity income helped lift investment management revenues 38% to $502 million.

Citigroup has taken some criticism for weak top-line growth of 6% to $20.5 billion, an 8% sequential drop and substantially below estimates. Earnings quality was also questioned, as part of the gain stemmed from the decision to free up about $700 million of commercial and consumer loan reserves that were previously set aside for credit losses. Furthermore, the Dow Jones component has been tainted by scandals in Europe and Japan. However, for investors who prefer blue-chip companies that dominate their market, are improving ROE (up to 21%) and trade at reasonable valuations (forward P/E in the single digits), Citigroup fits the description.

Fool contributor Nathan Slaughter owns none of the companies mentioned.