Saturday, April 12, 2008

General Electric's Earnings Miss Is Extremely Disappointing

“It takes many good deeds to build a good reputation, and only one bad one to lose it” ~ Benjamin Franklin

For me, General Electric (GE) has destroyed its reputation at a dependable performer. The company, which usually meets targets, announced earnings had fallen 6%. Investors punished the stock on Friday, sending it down 13% to $32.05, it's lowest since August, 2004.

I had previously written that General Electric is one of my core long term stock holdings. While my view of GE's potential has not changed, I am now less confident that Jeff Immelt will be able to effectively implement his green strategy for the company.

While I was willing to accept the under performance of the stock price, I am not as willing to accept under performance of business results. Given this result, I expect it will take four to eight quarters of meeting targets to restore investor confidence. For now, I will continue to hold GE stock, but may reconsider if GE should miss business result targets again.

Disclosure: I own GE.

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This is not financial advice. Please consult a professional advisor.

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