If you have been watching the movement in General Electric Co. (NYSE: GE) for this last week, you won’t be surprised to hear that this is due to intense "market chatter" out in the marketplace. We do not want to contribute any at all to what is starting to look, sound and feel like intense rumor mongering.
What is interesting and sad at the same time is that right now Wall Street is not even taking a wait and see attitude because of the credibility issues of so many financial companies. The long and short is that traders shoot first and ask questions later.
Much of the market chatter I have personally been asked about and have heard doesn’t add up, but that is a matter of opinion and the ticker tape painted a different picture this week. The "market chatter" has pointed GE needing to make a capital infusion into its GE Capital unit, some chatter on its prized "Triple-A" debt rating potentially being under review, and even that excessive losses from UK-based mortgages were all "developing situations."
Here is the good news: Shares have recovered sharply off of today’s lows and the stock is no longer on 52-week lows. Shares closed up 0.4% at $29.17 (unofficial close), and that is after an intra-day low of $28.49 was put in. The prior 52-week low was $28.89.
I put in a call to Russell Wilkerson at GE Corporate, who communicates regularly with the media. His quote was as follows: "We don’t comment on market rumors. On May 21, Jeff (Immelt) made it very clear that we are not raising external capital and have no need to. Our Triple-A credit rating is secure, self funded and recently reaffirmed by the rating agencies. Nothing has changed."
The interesting part is that after a brief conversation, there is an obvious sense of frustration over the actions seen this week. Shares were just at $30.50 Tuesday. The long and short of the matter is that you never know if market rumors are fake or if they have been in the fire because of what is developing inside a unit of a company or what is developing externally.
If you want to see how frantic the trading has been, GE traded 114 million shares today after seeing 95 million shares trade yesterday. These have been the two most active days since the company’s warning back in April.
Jon C. Ogg
June 13, 2008
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