GE Blames Bear Stearns For Miss

[Pale Blue Dot]

General Electric Co. unexpectedly reported its first quarterly profit decline since 2003, sending U.S. and European stocks lower, as the credit market's seizure spread to the world's third-largest company by market value. GE dropped as much as 12 percent in New York trading, the most since the October 1987 market crash. The decline wiped out about $44 billion in market capitalization.

Chief Executive Officer Jeffrey Immelt cut the annual forecast he once told investors was "in the bag" for 2008 and had repeated as recently as March 13. GE now says capital markets seized up just days later, forcing it to cut the value of some securities in the last two weeks of the quarter and blocking some asset sales. The Federal Reserve's March 14 move to help rescue Bear Stearns Cos. created "a different world," he said today.

My Comment: Somehow the "rescue" of Bear Stearns created "a different world." What would the world look like were it not for the rescue?

On a conference call today, analysts demanded that Immelt explain why he told retail investors on a March 13 Webcast that Fairfield, Connecticut-based GE would likely meet its annual forecast of at least $2.42 a share.

"Two days after the Webcast, the Bear Stearns situation took place," Immelt said. "The last two weeks in March were a different world in financial services."

My Comment: With that, GE admits what many of us knew already. GE, like GM is not a manufacturing company. Both are finance companies loaded to the gills in debt. The difference between the two is GM has subprime products and subprime debt while GE has arguably higher qualities of debt and products.


http://globaleconomicanalysis.blogspot.com/2008/04/ge-blames-bear-stears-for-miss.html

Please note: The comments are not mine, but those of the author of the blog.

[DemocratInSoCal]

1. WAAAHHHHH!!! WAAAAAHHHHH!!!! WAAHHHHH!!!! IT WASN'T OUR FAULT!!!!!!

It Was UNEXPECTED!!!

We Didn't Cause This!!!

We NEVER Saw It Coming!!!

Don't Worry.....Chuckle, Chuckle.....THIS IS THE BOTTOM!!!

[A HERETIC I AM]

2. So this "Registered Investment Advisor" thinks GE is not a manufacturing company?

Hmmm..

I wonder what all the people that work in all those GE (and GM) manufacturing plants would say to that.

GE's reduction in their earnings report had primarily to do with their finance company. But to suggest both "GE, like GM is not a manufacturing company. Both are finance companies loaded to the gills in debt." is inaccurate. GMAC & GE Finance certainly have their problems but GMAC is NOT General Motors, any more than General Electric Commercial Finance is General Electric.

[Celebration]

3. yeah

they are hugely diversified.

I think I read that community hospitals had their borrowing costs skyrocket, and they cancelled orders for various imaging machines, etc. But I am not really sure that this had anything to to with Bear Stearns. Borrowing costs for all (small and middle sized entities) have been astronomical over the last couple of months.

The order cancellations probably didn't hit until late in the quarter.