GE Warns Again Of Tough Times
Posted on April 24, 2008 in the Stocks category
.Less than two weeks after General Electric (GE) shocked investors by reporting a 6% loss in first-quarter profits, CEO Jeff Immelt said Wednesday that he sees “even more difficult times ahead” for the economy.
GE’s first-quarter earnings report triggered a plunge that wiped out more than $46 billion of its market capitalization and saw the company’s stock fall nearly 13%.
The earnings report surprised many analysts because Immelt has promised investors in March that the company would achieve a 10% earnings rise in 2008. After this month’s drop in earnings, GE lowered its projected earnings to 5% or less
This week Immelt said that GE will increase its planned cost cutting from $2 billion to $3 billion.
“We are in the toughest economy since 2001 and the worst housing crisis since the Depression,” Immelt said. “Banks have written off more than $250 billion. … Days of easy credit have turned into months of no credit at all. While I am confident about the economy long term, we could see even more difficult times ahead.”
GE was one of the five stocks to buy that Money Magazine had recommended. We reviewed this list on April 10th and said that at that point we did not think that GE was a good purchase due to the credit crunch. At that time, GE was trading at $36.44. Today it is at $32.35.
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