<<Wait a Second: What Devils Lurk in the Details?
By GRETCHEN MORGENSON
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Are the glory days of nonstop earnings growth over at the General Electric Company?
Management doesn't appear to think so. Last Thursday, when G.E. reported its first-quarter results, Keith S. Sherin, the chief financial officer, was decidedly upbeat. Acknowledging that the business environment remains difficult, he pointed to the company's strong balance sheet and the diversity of G.E.'s businesses and said they enabled the company to produce what he called consistently excellent earnings growth. "The business model works," Mr. Sherin proclaimed.
But investors weren't so sure. Just moments after Mr. Sherin uttered those words, shareholders began dumping G.E. stock. By the end of the day, the shares of G.E., the nation's largest company by market capitalization, had lost 9 percent of their value, sinking to $33.75. By the close of trading on Friday, they had drifted down to $33.55.
It has been a long time since the gap was so wide between what G.E. management reported as a strong performance and what its investors were hoping for. In fact, while G.E. executives said the company had delivered "excellent earnings growth" as always, what they actually issued was a report that investors, and even some analysts, found lacking in both substance and performance. And that is raising questions.
"We went through a decade where we just accepted G.E.'s numbers," ( this shows matters are changing i believe--max) said Thomas K. Brown, the chief executive of Second Curve Capital, a hedge fund in New York. "Now the more we look at them, the more we say, `wait a minute.' I don't understand what's going on here, and the more I understand it, the more I'm concerned."
For the first quarter, G.E. reported that earnings -- for rest of article nytimes.com |
