GE: Immeltdown?

Investors aren't taking kindly to the earnings miss General Electric announced Friday morning. The company reported 44 cents vs. 48 cents a year ago and a consensus estimate of 51 cents. The stock is off by 12% at this time; since Jeff Immelt took over as CEO in 2001, it has fallen by nearly 20%, in a stock market that's up by 19% over the same period.

Immelt told investors Friday morning he wants to "not make excuses" about the poor results--then made the excuse that they came about from the freezeup in the credit markets. How convenient! CNBC, ever the team player, is defending the company at this point as best it can.

I don't buy it. Odd, isn't it, that just about every major financial institution in the country has reported substantial credit problems lately, while GE Capital has sailed though without a nick? It could be, I suppose, that the people at GE Capital are simply smarter than everybody else. Or maybe, just maybe, the company can cover up any credit issues it has, since it doesn't have any banking regulators sniffing through its books.

If GE is being creative in reporting the results from its finance unit, this wouldn't be the first time. Virtually all the company's earnings growth over the final five years of Jack Welch's tenure came about from chronic underreserving at its reinsurance unit (which has since been sold). So these guys know thing or two about denying reality. I have a funny feeling this won't be GE's only earnings hiccup this year.

Comments

[ED K]

I WOULD NORMALLY BE THE LAST PERSON TO DEFEND MR. IMMELT BUT THIS TIME I THINK GE'S RESULTS MIGHT HAVE BEEN BEYOND HIS CONTROL.ALTHOUGH HE HAS TO TAKE THE HEAT FOR THE MISS I BELIEVE THE FINANCIAL SECTOR MELTDOWN AND ECONOMIC SLOWDOWN WERE THE MAIN CONTRIBUTORS TO THIS.BY THE WAY I HAVE NEVER LIKED HIM AS GE'S CEO.

[User 177370]

Time for a change. GE stock hasn't done much of anything since he took over.

[SB-tiger]

GE has done nothing, unlikely will do anything for a long time – conglomerates just don't work. Stay away.
However GEs miss comes up on top of Alcoa and UPS- just about all the bell weathers in a week. Big trouble ahead for all. Shallow recession is out the window, brace for long painful downturn.

[MB1968]

Vernon, you have noideaq what you are talking about. I used to work for GE under Jack and Jeff and the earnings growth at GE Capital were quite real and not from what your are claiming. Please do your research and refrain from writing ignorant columns until you are better informed.

[ACEMAN]

Dat GE dawg don't hunt! Vernon is a smart cookie and should have advanced his opinion some two months ago so all of us could have made some short money. Jeff Meltdown was on Charlie Rose recently and was giving his rosiest of interpretations on why GE Good, rest of market Bad routine. The ever faithfull lap dog Charlie I won't ask any question that is meaningful Rose failed to challenge those rosiest of forecasts by Jeff the tuna Meltdown. Obviously Mr Meltdown is enjoying the cuisine at the GE office cantina 'cause he done gained a lot of weight since he be the man. Moral: don't listen to CEO's, ya gotta dig deep to overcome the dung. And then you just might have a barrel of dung at that! Vernon, keep on writin' but give us a two months heads up in the future, my man.