General Electric's unexpected drop in first-quarter profit rattled Wall Street, but it also shook the confidence of market pros who follow the company.
CNBC, which is owned by GE , asked the experts what they thought about the disappointing results and whether they will have broader implications on the market.
GE: Credibility Lost?
“Seventy-five percent of the miss was on the financial services side, and in particular a lot of that took root after the Bear Stearns announcement, and the biggest piece was probably a total cessation of commercial real estate sales, so that’s fairly well explained…The bigger issue of credibility is the billing to perform in a down market as a unique attribute of GE.”
Christopher Glynn, Oppenheimer Analyst
GE’s Road Ahead
“We’re really not going to see investors re-embrace this stock until we can look at a portfolio where the mix of businesses will allow sustainable above-average performance, and when 60 percent of the company is growing mid-single digits and 40 percent is growing 15 to 20, it’s very hard to get that mix to just come to double-digit levels.”
Nicholas Heymann, Sterne Agee Director of Global Infrastructure
A Tale of Two Companies
“This is definitely a tale of two companies. The global growth story is reflected in the infrastructure and the U.S. credit crisis as reflected here in the financials numbers. I would also point out that there are financial services operations that are buried within each of the other line items at GE here, too, so it’s a little bit higher than 40 percent exposure to capital markets and financials.”
Steve Hoedt, National City Corp.
The GE Effect
"The company was out talking as late as February and everything was looking okay at that point, so I think this really is going to shake confidence in the little bit of a turnaround we've seen in the markets and the credit markets over the last three weeks."
Jack Degan, Harbor Advisory