A leaked memo from Citigroup CEO Vikram Pandit to the company’s 300,000 staff says that the troubled bank booked revenues of $19 billion in the first two months of this year and turned a profit—its strongest quarter-to-date performance since late 2007. Pandit said in his open letter that he was confident of the bank’s capital strength after completing tough internal stress tests. News of the memo, which the bank did not confirm, sparked a rally in shares of Citigroup and other banks in early European trading on Mar. 10.

Yet even as Citi may have turned a corner, the Wall Street Journal reports that U.S. officials are weighing what additional steps might be needed to help the bank just one week after its third multi-billion dollar bailout. The discussions among Treasury officials and banking regulators take the form of contingency planning and do not reflect an imminent further rescue operation.

Source: Times of London, Reuters, Wall Street Journal

AIG Warned of ‘Catastrophic’ Failure

On the eve of its latest bailout, insurance giant American International Group warned U.S. government officials that it needed more help from the Treasury Department and Federal Reserve to prevent “potentially catastrophic unforeseen consequences” and cautioned that its failure would cause a “chain reaction of enormous proportion.”

Source: Washington Post

Dow Chemical Reignites Merger Plan with Rohm and Haas

The contentious $15 billion takeover bid, which foundered in January on Dow’s worries over debt and its credit rating, is back on the table. Under a new proposal announced Mar. 9, Dow will pay for Rohm with a combination of cash and preferred shares.

Source: Financial Times

Ford Workers Approve UAW Contract Changes

Unionized workers at Ford Motor Co. have approved contract changes that include freezing wages and cutting benefits in a move aimed at helping the automaker remain competitive. The agreement is likely to be a model for contract negotiations with ailing General Motors and Chrysler.

Source: Los Angeles Times/AP

Drug Mergers: Killers for Research

Merck’s decision to acquire Schering-Plough for $41 billion will improve its bottom line over the next two to three years, as the merged company cuts staffers and streamlines its operating costs. But when big pharmaceutical companies merge, like Merck and Schering-Plough or Pfizer and Wyeth, R&D always seems to suffer.

Source: BusinessWeek

EADS Profit Tops Expectations But 2009 Could Be Tougher

European aerospace giant EADS reported sharply higher operating profits for 2008 as its Airbus unit climbed out of the red. But officials cautioned that slumping demand and the possible cancellation of its troubled A400M military transport could weigh on 2009 results.

Source: Reuters

Airlines Fret as Customers Flee

Airlines had hoped that declining fuel prices would make up for falling passenger numbers, but demand for air travel is sliding far faster than expected, raising the prospect of further capacity cuts to stave off losses.

Source: Wall Street Journal

China Reports Falling Prices

Statistics released Mar. 10 contained worrisome signs of deflationary pressure in China, with consumer prices falling 1.6% in February from the same month last year. Most economists still don’t expect China to suffer a broad decline in prices this year.

Source: New York Times

Optimism Emerges in Europe

ECB President Jean-Claude Trichet and other central bankers meeting in Switzerland expressed cautious hope that a turning point could be near for the troubled global economy, thanks to stimulus plans, low interest rates, and cheap energy prices. But that view isn’t universally shared, especially in the U.S.

Source: Wall Street Journal

Germany Shuns a Stimulus Spending Spree

Though a recovery of the German economy is key to a broader global turnaround, the country’s deep-seated aversion to piling on debt and its historic fear of inflation is prompting leaders there to shun lavish stimulus spending in favor of a wait-and-see approach.

Source: New York Times

Obama’s New Tech Czar

Vivek Kundra says he’ll improve the federal government’s technology, but he faces an immense challenge. After all, the government is better known for technology fiascoes than successes.

Source: BusinessWeek

Conversation of the Day: Extreme Customer Service

Reader Chuck Gaffney writes: “Companies need to realize customer service keeps a company afloat even if their prices aren’t the lowest since people pay for quality.”

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