Citigroup is looking to Hewlett-Packard for a road map to turning around its troubled business model without splitting up the company.
Top executives at Citi recently sought advice from their counterparts at HP about how the computer company engineered a successful turnaround after the forced departure of Carly Fiorina as chief executive in 2005, the Financial Times reports. The talks "have focused on IT issues, as well as general strategy," the newspaper says, citing unnamed sources "close to the situation."
Like HP a few years ago, Citi recently dumped a chief executive (Chuck Prince) and is being pressed by shareholders to sell off major business segments following multi-billion dollar losses and a 54 percent dive in the bank's share price. Citi executives reportedly are mindful of the parallels, and of the fact that HP, after resisting investor pressure to spin off the troubled Compaq personal computer business acquired earlier in the decade, restored profitability by pursuing scale economies and cost-cutting. HP shares gained 17 percent in the past year.
What's more, streamlining Citi's far-flung IT operation figures heavily in Chief Executive Vikram Pandit's plans. The bank employs some 23,000 developers, and its decentralized operation includes a number of duplicated functions. Pandit has moved to have all IT decisions in New York.