you can over beat the cream cheese and separate the water right out of it. I always whip my butter/hi-ratio first until light and fluffy (and the yellow color has disappeared) then add the powder sugar. Finally, I add my cream cheese the very last.
and there is a method of adding in softened and pre-whipped cream cheese into a meringue based buttercream like was mentioned (and it is so fabulously yummy!). The pic does look like a SMBC or IMBC gone wrong.