Given the level of anger over General Electric Co.'s latest downward revision to its full-year earnings forecast, it is amazing the stock is down a mere 2.5 per cent on Thursday morning. Perhaps it's because GE is a symbol of the U.S. economy - and the fact that the company is still making money is a hopeful sign for investors that the economy isn't broken. Yet.
Or, perhaps its because the shares have already fallen 35 per cent this year, and the price is near its lowest level over the past five-and-a-half years.
GE announced that its full-year earnings would come in at $1.95 to $2.10 (U.S.) a share, down from a previous forecast of $2.20 to $2.30 a share - a deep cut. Although it will maintain its dividend, another disappointment for investors who used to count on annual increases, the conglomerate suspended its stock buyback program.
"The good news: GE is maintaining, for now, that the problem is just its hedge fund," said Henry Blodget, writing on Silicon Alley Insider. "Its other businesses, it says, are doing fine. This week. As far as Jeff Immelt knows."
Can you hear the sarcasm in his voice?
Douglas McIntyre, writing on 24/7 Wall Street, was equally appalled. "The real shame of the GE announcement is that the news from the company never gets better. It always gets worse. If CEO Jeff Immelt's tenure is marked by one thing it is a hardy optimism followed by foolish revisions," Mr. McIntyre said. "Nothing the company says now can be taken seriously. Immelt has completely lost the market's trust that anything he says is true."