GE Drops the Bomb

GE shocked the market with a lousy earnings report, sending its shares down 10% and taking the rest of the market down with it. Analysts were shocked, absolutely shocked to discover that GE is really just a large financial company masquerading as an industrial titan. Earnings from GE's financial services arm were down 20%. According to CEO Immelt "The financial services environment was very difficult and became even more difficult late in the quarter." No surprise to anyone except for the Merrill analyst who upgraded this stock to a "buy" on March 20th. The stock actually rallied 5.3% on the upgrade, as the analyst claimed confidently that GE would not suffer from the difficulties in the credit markets. Maybe the cheery upgrade was in response to GE buying Merrill's consumer finance unit in December, helping Merrill free up some much needed capital? This is just pure speculation on my part as equity analysts don't have a history of conflicts of interest. The moral of this story is never take stock advice from a company who is about to post yet another $6 billion or so in further write-downs.