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Market Drops After A Week Of Bad NewsThe first week of earnings reports ended Friday with a thud. Related CNBC Video – Immelt on G.E. Earnings: Part 1 | Part 2 Times Topics: General Electric CompanyGeneral Electric reported a 5.8 percent decline in first-quarter profit on Friday, falling far short of expectations and stunning investors who consider the company one of the nation’s most reliable earners. The report was taken as a sign that credit problems continued to plague the nation’s biggest businesses, and stock markets on Wall Street dropped sharply. The Dow Jones industrial average, which includes G.E., lost more than 250 points to end the day down 2 percent, its worst session in three weeks. Shares of G.E. shares fell 12.9 percent to $32 a share. The decline was exacerbated by a bleak report on consumer confidence, which revealed Americans feel worse about their economy than any time in the past 26 years. The broader Standard & Poor’s 500-stock index dropped 2 percent, and the Nasdaq composite index lost 2.6 percent. Bond prices rose as some investors fled for safer ground. G.E. is known for rarely missing its estimates, and its painful earnings report could further erode confidence in the economy’s ability to rebound from the current financial crisis. The company’s losses came primarily from the company’s financial services division, popular with consumers and small businesses, which was buffeted by recent economic shocks. “We failed to meet our expectations,” Jeffrey R. Immelt, the company’s chief executive, said in a statement. “We knew the first quarter was going to be challenging, but the extraordinary disruption in the capital markets in March affected our ability to complete asset sales.” The company reported net income of $4.3 billion for the quarter, or 43 cents a share, down from $4.57 billion, or 44 cents a share, in the period a year earlier. Analysts had been expecting about 51 cents a share in net earnings, and the company had projected earnings of 50 to 53 cents a share. G.E., which is considered a bellwether of big business, also sharply lowered its full-year earnings forecast; the company now predicts little to no growth for all of 2008. As he fielded questions from disgruntled analysts on a conference call Friday morning, Mr. Immelt insisted that “the core business remains solid.” But he acknowledged that recent financial developments, including the collapse of Bear Stearns, took a severe toll. Earnings at the company’s financial services operation plummeted 19 percent for the quarter. Mr. Immelt said he regretted the poor performance. “We hate missing our numbers,” he said. Tag CloudExternal InformationAdditional Information2 Studios Escalate Actions Against Striking Writers...Countrywide to Help Restructure Loans... Halliburton Says Profit Will Slide... Need to Know: Global Business Briefing... Where Am I?News Main Page - Business - Market Drops After A Week Of Bad News |
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