Citigroup (
C,
news,
msgs) is the latest financial institution to be battered by the summertime mortgage mess.
The bank said net income for the third quarter is expected to plummet 60% from the third quarter of 2006.
"Our expected third-quarter results are a clear disappointment," Chief Executive Officer Chuck Prince said in a press release. "The decline in income was driven primarily by weak performance in fixed-income-credit-market activities, write-downs in leveraged loan commitments, and increases in consumer credit costs," Prince said.
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More on Citi's warningInvestors took the warning as a sign that the bank will have a clean slate for 2008, however: Shares of Citi were up 86 cents, or 1.84%, to $47.53 in morning trading.
Stocks moved higher on the first day of trading in October. At 11:20 a.m. ET, the Dow Jones Industrial Average was up 109 points to 14,004. The last -- and first -- time the Dow reached the 14,000 mark was on July 19.
This morning, the Nasdaq Composite Index was up 20 points to 2,721, and the Standard & Poor's 500 Index had gained 10 points to 1,537.
The Dow gained 4% in September, the best September performance for the Dow since 1998. September's gains helped offset weak performance in July and August to yield a 3.6% overall Dow increase for the third quarter.
Prince also said that Citigroup, which will report third-quarter earnings on Oct. 15, will see $1.3 billion in losses from subprime mortgage-backed securities.
Get free, real-time stock quotes on MSN MoneyThe subprime mortgage market imploded this year, after higher interest rates and falling home prices caused subprime, or high-risk, borrowers, to default on their mortgages.
Mortgage mess slams UBS, too The mortgage-market meltdown has hit UBS (
UBS,
news,
msgs) as well. The Swiss bank said today it will report a third-quarter pretax loss -- the first yet among all the banks and financial services companies affected by the mortgage-market mess.
UBS plans to write down the value of its fixed-income assets as much as $3.4 billion because of the losses.
"On August 14, I said that if turbulent conditions prevail throughout the quarter, we will probably see a very weak trading result in the investment bank, offset by predictable earnings from wealth and asset management," newly appointed CEO Marcel Rohner said in a statement. "In fact, conditions remained turbulent, so we will make an overall pretax loss."
UBS will report results on Oct. 30.
Again, investors appeared relieved to have the bad news on the table: Shares of the stock were up $2.29, or 4.3%, to $55.54 this morning.
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Finding good growth stocksIn July, UBS ousted Peter Wuffli as CEO after he closed the bank's hedge-fund unit, Dillon Read Capital Management, because of huge losses from the subprime-mortgage mess.
The losses have caused a shake-up at the bank: Huw Jenkins, head of UBS' investment banking unit, and Chief Financial Officer Clive Standish are both leaving their spots. Jenkins is stepping down and will be an adviser to Rohner, while Standish is retiring. UBS will also cut 1,500 jobs.
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Citigroup
UBS
"Rohner is cleaning the desk and in a very decisive way," Dieter Buchholz, money manager at AIG Private Bank in Zurich, said to Bloomberg News. "This comes as a surprise, but it's positive that we know how big the fallout is."
In September, Lehman Bros. (
LEH,
news,
msgs) and Goldman Sachs (
GS,
news,
msgs) reported strong results, but Morgan Stanley (
MS,
news,
msgs) and Bear Stearns (
BSC,
news,
msgs) were hit by the mortgage-market mess and credit crunch.
Merrill Lynch (
MER,
news,
msgs) and JPMorganChase (
JPM,
news,
msgs) will report later this month.
Nokia will buy Navteq Finnish cell-phone maker Nokia (
NOK,
news,
msgs) is buying navigation software maker Navteq (
NVT,
news,
msgs) for $8.1 billion, or $78 per share in cash.
The deal will help Nokia move into the mobile-services arena, potentially tapping more customers.
Navteq has digital maps of 69 countries on six continents and the company's database can offer up to 200 road attributes on any section of a road, Navteq's Web site said.
Nokia has already started to add new products like games and music to its phones.
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The most powerful women in businessNavteq is "the most significant player in its field," Jari Honko, an analyst at eQ Bank in Helsinki, said to CNNMoney.com. "This is one of the areas that should become extremely important in the future," Honko said, adding that "Nokia could very well build one of its core services around it."
Investors were less impressed, however: Shares of Nokia fell 76 cents, or 2%, to $37.17 in morning trading, while shares of Navteq dropped $1 to $77.97.
"The Navteq acquisition is negative in the short term," Jesper Kruger, money manager at ATP in Copenhagen, said to Bloomberg News. "Nokia has paid an extremely high multiple. After a fantastic 2007 performance, you can expect to see Nokia stock take a breather."
Acxiom deal gets the axe Shares of data processing company Acxiom (
ACXM,
news,
msgs) plunged $4.43, or 22.4%, to $15.36 this morning, after a group of private-equity buyers decided to bail on the deal.
ValueAct Capital Partners and Silver Lake Partners had offered $2.25 billion, or $27.10 per share, for Acxiom in May, but after the company reported a loss of $11.5 million for its quarter ending June 30, the private-equity players have become less interested in the deal.
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10 stocks set to riseAcxiom will receive $65 million in termination fees.
Separately, Acxiom said it is looking for a new CEO after Charles Morgan said he is going to retire.
Morgan will continue to run the company until the company finds a successor.
Walgreens hit by generics Drugstore chain Walgreens (
WAG,
news,
msgs) said fiscal-fourth-quarter profit fell 4% to $396.5 million, or 40 cents per share, down from $412.3 million, or 41 cents per share, in the same period a year ago.
Shares of the stock tumbled $6.97, or 14.8%, to $40.27 on the news. Analysts had been looking for earnings of 47 cents per share.
"This quarter was negatively impacted by lower generic drug reimbursements, combined with higher salary and store expenses, and higher advertising costs," Chairman Jeffrey Rein said in a statement. But Rein was optimistic, saying the company is "going to fix this."
So what's going to happen now? While the stock markets fared well in September, investors will get an idea of whether the Federal Reserve might cut interest rates again when the September jobs report comes out Friday.
Economists are expecting nonfarm payrolls to rise 115,000, following a 4,000 drop in August -- the first decline in four years.
By Elizabeth Strott
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