Tuesday morning headlines

Citi's ugly numbers: The bank's fourth-quarter loss weighed in at close to $10 billion, the result of $17.4 billion in subprime-related write-downs. The results are pretty much what Wall Street had expected. Citi plans to cut its dividend, eliminate a bunch of jobs, and get capital infusions from wealthy foreign governments - as well as former Chairman and CEO Sandy Weill. Speaking of infusions, Merrill Lynch, another troubled Wall Street firm, is getting $6.6 billion from the Korean Investment Corp., Kuwait Investment Authority and Mizuho Corporate Bank. All will be passive investors and none will have any rights of control. Merrill reports fourth-quarter earnings on Thursday and they're likely to be ugly. (NYT, AP)

Stocks take another hit: There's the sour Citi news, of course, along with a 0.4 percent decline in December retail sales (that's very unusual). The big fear, of course, is that the consumer has stopped spending, and if that happens it's recession-ville. (AP)

Networks drop bomb: They've been dumping writers and producers from their rolls under force majeure clauses that allow a studio to unilaterally cancel contracts in the event of a crisis such as a strike. That means no more paychecks for a bunch of writer/producers. From Variety:

While there were exceptions, studios seemed to be targeting scribes who have deals with less than a year left or those who aren’t currently working on a big show. The thinking: Given the unlikelihood that any real development will take place before June, why not save coin and cut the scribes now? Some predicted the move would backfire, however. "There are some great pieces of talent who’ve been cut, people affiliated with shows that are now going to be (free agents)," one tenpercenter noted. "When it’s over, it’s going to be an absolute free-for-all."

Directors keep talking: Today will be the fourth straight day of contract talks with the media companies, and the conventional wisdom is that a deal is close (maybe a week or so). Assuming that the new contract will be at least reasonable for the directors in areas like new media, there's bound to be a bunch of pressure on the WGA leadership to get back to the bargaining table. When they last left, the studios and networks demanded that the writers drop six proposals as a condition of continuing to bargain. The WGA has refused, though there may be some bargaining room - whenever both sides stop acting like children, that is. (Variety)

Making billions on subprime bet: His name is John Paulson, a little-known hedge fund manager who figured the housing market was in for a big fall and timed his buying and selling just right - reaping an estimated $3 billion to $4 billion, according to the WSJ.

Like many legendary market killings, from Warren Buffett's takeovers of small companies in the '70s to Wilbur Ross's steelmaker consolidation earlier this decade, Mr. Paulson's sprang from defying conventional wisdom. In early 2006, the wisdom was that while loose lending standards might be of some concern, deep trouble in the housing and mortgage markets was unlikely. A lot of big Wall Street players were in this camp, as seen by the giant mortgage-market losses they're disclosing. "Most people told us house prices never go down on a national level, and that there had never been a default of an investment-grade-rated mortgage bond," Mr. Paulson says. "Mortgage experts were too caught up" in the housing boom.

Today is MacWorld!: CEO Steve Jobs delivers his annual state of the Apple address at the Moscone Center in SF.

Gas prices down: The government's latest survey has the average price of unleaded regular in L.A. at $3.271 a gallon, down from $3.316 a week earlier. Oil has taken a big hit this morning, with crude-oil futures dropping to $91.65 a barrel - mostly based on concerns about a drop in demand due to the weakening U.S. economy. (EIA)

Port fee approved: It will be assessed for containers entering and leaving the ports of Los Angeles and Long Beach starting Jan. 1, 2009. The $15 fee is expected to generate $1.4 billion for infrastructure projects. (Daily Breeze)

LAX study approved: They'll be looking at a possible reconfiguring of the northern runways, along with redesigning Terminals 1, 2 and 3; installing an automated people mover; and building a new ground transportation system that might connect the airport to the Green Line. A first draft of the report is expected by August 2009, but it could be many more years before anything actually happens. (Daily Breeze)

Shakeup at Northrop: The L.A.-based aerospace giant will merge its Gulf Coast and Newport News, Va., shipyard operations in a long-expected reorganization. Also, the company is realigning the reporting of its missiles business from its Mission Systems sector to its Space Technology sector, effective July 1. (Mobile, Ala. Press-Register)

Ticketmaster buys reseller: TicketsNow, a Web site that resells tickets to concerts and sports events, is an effort by the West Hollywood-based company to get a bigger piece of the secondary tickets market. Ticketmaster said it planned to build a site that allows customers to review and compare ticket pricing in the primary, premium and resale markets. Financial terms were not disclosed, but the WSJ said the deal was worth $265 million. (Reuters)

Lacter on radio: This morning's business chat with KPCC''s Steve Julian covers a slowdown in spending by the affluent, the legacy that Countrywide leaves behind, and how law firms can make money in a downturn.