Can GE Earnings Rescue the Market? (GE)

We are set for earnings out of General Electric Co. (NYSE: GE) early Friday morning.  If you have been watching the tape and if you have been paying attention to the economic data, it is impossible to expect and solid earnings from the world’s largest conglomerate.  There are also more things to consider here than just the earnings as GE reflects much of the global economy.

First Call has earnings expected to be $0.45 EPS and $47.34 billion inrevenues.  Estimates for next quarter are $0.56 EPS on $51.27 billionin revenues.  Keep in mind that estimates have come down from $0.54 forthis quarterly report and from $0.70 for the next quarter report overthe last 90 days.  We do not expect anything great out of the companyand are unofficially prepared for lower numbers than the stated FirstCall figures.

There is one thing to consider here, and most will consider it heresy.What if Jeff Immelt comes out tomorrow and says "Look, this market hasgotten completely not reflective of reality.  We are seeing broad basedslowing and contractions, but nowhere near the levels you would seereflected in the major stock market components." 

There is also a flipside here, and one which Jeff Immelt has toconsider his comments before speaking.  If Immelt comes out and says,"We are on the edge of the abyss and on the verge of a global meltdown"then look out below.  That is how this market feels right now.  Let’shope that Immelt is able to be able to say the first scenario.

Right now, options, charts, and fundamentals are out the window.  Weare not even going to bother throwing all the developments out there.

It is unfortunate, but the company might not now be able to effectivelymake its spin-off of key units that it was wishing to do.  Shareholdersmay want to blame  management for the horrible performance, but it ishard to blame Immelt or any others in the company for the currentclimate.  Despite it still having much finance and consumer exposure,GE did exit the mortgage side of things before the blow-up took place.

Shares closed down another 7.9% Thursday to new 52-week lows at$19.01.  Its previous 52-week trading range was $19.69 to $42.09.  Thisis actually the lowest share price for GE this entire decade.

Jon C. Ogg
October 9, 2008