Investors Lose Faith in BofA

Bank of America (BAC) reported a $4.2 billion first-quarter profit yesterday, but investors said, "That's not enough." The Washington Post, the Wall Street Journal, and the New York Times report that upon news of the earnings, which were largely buttressed by one-time windfalls, Bank of America's shares fell 24 percent to $8.02. In fact, financial stocks in the S&P 500 dropped 11 percent "as investors fretted that major banks could face more credit losses or write-downs or the need to raise additional capital," the NYT writes. The WSJ and the WP zero in on the growing movement to oust CEO and Chairman Ken Lewis from at least one of his roles. According to the paper, another proxy-advisory firm (making that four in total) has recommended "shareholders withhold their votes" for Lewis' re-election as chairman, "citing the 'potential conflict' of the dual roles."

Meanwhile, as the WP reports, Bank of America has voiced support of Lewis' leadership despite outside criticism over the acquisitions of Merrill Lynch (MER) and Countrywide, both of which he orchestrated. However, it was the performance of these two organizations that buoyed the bank's earnings, which Lewis duly points out in an interview on CNBC that can be accessed through the Times' Web site. Bank of America's balance sheet was also goosed by the same accounting practices that have enlarged profits this reporting season.

Bloomberg predicts that Citigroup's board will remain intact following a shareholder meeting this afternoon. The government, Citi's soon-to-be largest shareholder, may be "less forgiving" over the bank's $28 billion in losses and 77 percent stock decline last year. "Treasury Secretary Timothy Geithner said on April 5 that he's prepared to oust executives and directors at banks that require 'exceptional' assistance." And, as Bloomberg is quick to point out, Citigroup (C) has "already taken $45 billion of taxpayer money and may need more after the Obama administration reveals on May 4 how the 19 largest U.S. banks fared on stress tests." Christopher Whalen, a managing director at bank-research firm Institutional Risk Analytics, tells Bloomberg that Citigroup will come out as one of the lowest performers. However, it is unclear whether Whalen has any inside knowledge of the tests.

Reuters gets techy with a story about Sun Microsystems (JAVA), which has (Surprise!) been sold to Oracle Corp. after talks with IBM (IBM) fell apart, and one about Apple (AAPL) investors, which it says will offer up the usual scrutiny of the company's earnings slated to come out this week with analysts expecting a sell-off. The $7 billion Oracle-Sun acquisition will bring together two longtime friends, Oracle (ORCL) CEO Larry Ellison and Sun Chairman Scot McNealy, and will mark Oracle's first foray into the computer hardware industry. The news stunned some Sun-watchers, many of whom believe Oracle "can boost profitability at Sun's software businesses but were unsure if it can be as successful with Sun's hardware unit amid stiff competition," Reuters writes. Skepticism aside, the deal will make Oracle "the world's fourth-largest maker of servers, with the No. 2 slot in the high-end of the market, which was worth about $17 billion last year." The company is already the No. 2 maker of business software. The first? IBM.