Citigroup looks to cut variable costs yet revenue could suffer

In an attempt to restructure their business and increase falling profit margins the firm Citigroup is planning on cutting 26,000 jobs. This would be about 12.5% of CitiGroups workforce of 327,000. This has come after investors have pressured CEO Charles Prince to restructure the company after only a 15% in the company stock. However many analysts believe that this new cost cutting campaign will not solve Citigroups problems, they will only provide a quick short term solution. Citigroup is taking two major risks with this new plan. As Craig Woker, an analyst for Morningstar said: "If you cut too deeply, you end up potentially sacrificing more revenue than you're saving. The other risk is that growth just naturally starts accelerating on its own, in which case you end up flat-footed, and you end up hiring back employees that you just offered six months of severance pay to."