Here's a friend's take on the General Electric (GE) news Friday:
What Went Wrong at GE?
I won't go into detail because all the punditude doing that... But what I haven't heard from the punditude is the fact that GE is known for having the most managed earnings stream on the street... this never happens with them. So what changed all of the sudden? How much did things slow? Remember this is a company where insiders were buying hand over fist 1-2 months ago... So how sharply did things slow that last month?
And with respect to the punditude... man, the spin out there... GE guidance/orders etc. stunk across the board ex infrastructure (inflation) -- in fact IMO order book looked much worse than what their numbers show (except for businesses exposed to inflationary trends as their revenue source IE infrastructure)...but as is typical of the market, somehow GE is "company specific"...here is an example of some of the spin:
"GE miss DOES NOT have implications for broader industrial or financial names. It's just a bunch of odds and ends that all hit at the same time. We were on the road with Emerson last week, and they said they're not seeing anything."
BTW, also what is fascinating for those who say there is alot of "negativity" (is that a word?) out there, the VIX hit its LOW for the year [Thursday]... precious that GE comes out and whiffs the day after that happens... anyway the financial system is a wreck and equity market VIX put in a low - makes perfect sense???
I think he's right about everything, except for this: "GE is known for having the most managed earnings stream on the street." GE under Welch indeed cooked the numbers and probably went way over the line (see: Greenberg, Hank among countless others), but we like Immelt in part because we think he's not cooking the numbers -- hence the less predictable earnings and the occasional big miss like this one. GE may well be pretty interesting here... though we don't own it.
Disclosure: No positions