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KAI RYSSDAL: It is not the best time, as we all know, to be in the financial business. So maybe it shouldn’t have been such a shock when GE reported a 6 percent drop in first quarter profits this morning. But it was. And if there’s one thing Wall Street doesn’t like, it’s surprises. Especially when it’s the third-largest company in the world bringing bad things to light. Here’s our Senior Business Correspondent Bob Moon.
BOB MOON: He insisted he wasn’t making excuses, but GE chief Jeffrey Immelt was doing an awful lot of explaining today, as he was grilled by analysts during a conference call.
How was it, they wanted to know, that as recently as a March 12th webcast he was promising a strong 10 percent rise in earnings despite the weakening economy. Today, Immelt pointed to worries over a near meltdown of the financial system a few days later:
JEFFREY IMMELT: I don’t want this to be a company that’s about excuses, but two days after the webcast the weekend of the Bear Stearns situation took place. You know, the last two weeks of March were a different world, particularly in financial services.
As it turns out, Immelt says now, the company fell victim to those unusually disruptive circumstances, which complicated the sale of certain assets, and unexpectedly changed its expected bottom line.
But some analysts noted that profits were down at four of GE’s six divisions, not just financial services. And some questioned whether it’s really the economy and the credit crisis, or if it’s more of a problem with GE itself. One analyst compared GE to the Chicago Cubs.
ANALYST ON CONFERENCE CALL: Every year it’s next year, it’s next year.
GE is financial manager James Hardesty’s biggest equity holding. But Hardesty says he’s hopeful this is a one-time problem:
JAMES HARDESTY: Tempers don’t make money in the stock market. When the day is done and we take the final tally, it’s how well this company is being run for the long term.
Hardesty says he’s disappointed that Immelt has now lowered GE’s profit outlook for the entire year. Hardesty says there will be limits to his patience with a company that’s been so reliable over the years.
In Los Angeles, I’m Bob Moon for Marketplace.
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