About Me

Retired chief investment officer and former NYSE firm partner with 50 plus years experience in field as analyst / economist, portfolio manager / trader, and CIO who has superb track record with multi $billion equities and fixed income portfolios. Advanced degrees, CFA. Having done much professional writing as a young guy, I now have a cryptic style. 40 years down on and around The Street confirms: CAVEAT EMPTOR IN SPADES !!!

Friday, April 11, 2008

GE Sends A Jolt

As a huge and widely diversified cyclical company, GE is widely
regarded for its comparative stability and its ability to manage
earnings to a forecast. So, the eps shortfall, mild as it was, shocked
the large players who have big positions in the stock. It did not help
that CEO Immelt gave a lame explanation for the shortfall and its
failure to warn analysts ahead of time will cost them points.

But, come on, Bernanke and other economists have been warning
for months that growth was at risk. At any rate, I bring this up
because the GE announcement spooked investors who were
supposed to be looking through the first quarter to recovery later in
the year. With the bulk of Q1 earnings reports ahead, folks might start
wondering that if GE can have "unexpected" trouble, then how many
other disappointments lie lurking in the tall weeds. Shows you that
investor nervousness and concern may still be hovering.

1 comment:

Rich said...

The reaction shows that the analysts who follow GE park their brains at the door of investor presentations. Half of GE is a finance company, and if you have to depend on counterparties to derive performance, you are sure as hell connected to the problems in the financial industry. The fact that they disappointed at least means that they aren't Enron; you can trust the numbers.

The utter nuttiness of the analysts suggesting that GE split finance from industrial is what really takes the cake. The vaunted AAA goes out the window on the split, as does the greater part of the finance comapny's earnings and liquidity.