Wall Street braces for grim bank results
By Riley McDermid, MarketWatch
Last update: 1:36 p.m. EDT April 11, 2008
NEW YORK (MarketWatch) -- Wall Street is gearing up for another round of grim financial news, this time in the form of first-quarter financial results that many banks are scheduled to report next week.
Several of the country's largest banks are on deck to issue their quarterly numbers, including J.P. Morgan Chase & Co. (JPMJPMorgan Chase & Co ) and Wells Fargo & Co. (WFCWells Fargo & Company ) on Wednesday, followed by Merrill Lynch & Co. (MERMerrill Lynch & Co., Inc ) on Thursday and Citigroup (CCitigroup, Inc) on Friday.
Some of the banks recently making headlines, as possible acquisition targets or for receiving enormous cash infusions, will be reporting as well, including Washington Mutual (WMWashington Mutual Inc ) on Tuesday and Wachovia Corp. (WBWachovia Corp ) on Friday.
Moreover, results from U.S. Bancorp (USBus bancorp del com new ) , Sovereign Bancorp (SOVSovereign Bancorp Inc ) , First Horizon National Corp. (FHNfirst horizon natl corp com ) , Capital One Financial (COFCapital One Financial Corporation ) and Bank of New York Mellon Corp. (BKbank of new york mellon corp com ) are on the weekly agenda.
Analysts have consistently warned that the biggest write-downs for banks in the first quarter will likely be from securities backed by mortgages and other consumer loans.
Goldman Sachs has estimated bank losses in the range of $12 billion in write-downs for Citigroup this past quarter and $2 billion for Merrill Lynch -- but virtually none for J.P. Morgan. That same report pegged Merrill as generating a loss of $2.45 a share, revised from a previously estimated profit of 25 cents, and estimated Citigroup's quarterly loss as widening to $1.55 a share
Ping!
It’s pretty amazing that G.E. didn’t warn the market that this quarter’s numbers were going to be light. Immeldt screwed up.
‘Shocking’ GE results show size of crisis
By Francesco Guerrera and Justin Baer in New York
Published: April 11 2008 12:57 | Last updated: April 11 2008 19:04
General Electric underlined the depth of the global financial crisis on Friday, announcing its worst quarter in five years and slashing full-year forecasts.
The news, described as “shocking” by a senior GE executive, combined with data showing that US consumer confidence was at a 26-year low to send shares lower. The S&P 500 fell 2 per cent in New York to 1,332.83.
Shares in GE, which derives more than half its revenues overseas and is seen as a bellwether of the global economy, led the way, falling 12.8 per cent – its biggest loss since the 1987 stock market crash.
The results are a blow to Jeffrey Immelt, chairman and chief executive, and could increase pressure for action at the group’s underperforming financial and healthcare divisions.
GE executives apologised for reporting the first fall in quarterly profits since 2003, but said their strategy was sound.
“The miss is shocking relative to our performance,” Keith Sherin, chief financial officer, told the Financial Times. “[But] we are not going to change our strategy because of a one-time miss.”
Mr Immelt presented an upbeat outlook less than a month ago, saying on a webcast that GE would increase earnings at least 10 per cent this year. GE said on Friday its profits would grow no more than 5 per cent in 2008.
Fielding hostile questions from analysts, Mr Immelt said the collapse of Bear Stearns days after the webcast and subsequent market turmoil prevented GE selling real estate. The group was also forced to take a $270m writedown on stocks, loans and securitised assets.
Mr Immelt, who succeeded Jack Welch nearly seven years ago, told analysts: “I understand your frustration...but I think we’ve got to look at the totality of the company. We earn a lot more money than we did five or six years ago. We generate a lot more cash. We bought back a lot of stock. And I think the franchise of the company is very strong.”
GE’s writedowns are small compared with those at other financial companies. But analysts said continued weakness in GE’s healthcare division and poor results in the industrial and appliances units showed that it was losing ground across its portfolio.
First quarter profit from continuing operations slipped to $4.36bn, or 44 cents a share, from $4.93bn, or 48 cents, a year ago and below the 51 cents expected by analysts.
“There is no getting away from it. This was a disappointing set of earnings from GE with weakness across the board,” said Nigel Coe, Deutsche Bank analyst.
GE owns NBC, too, doesn’t it? Wonder how those losses are figuring in...
As bad as today was my small/micro cap stock gained 5% today. Woo hoo!
I am not a financial person, far from it, but it seems to me some of those who are tend to spend a bit too much time looking at the markets. It’s like a doctor checking a sick person’s pulse every 1/2 second and declaring the patient dead 60 times a minute!
A mere flesh wound
Don’t ya just love it. When things go wrong all you hear is we didn’t do this, we didn’t do that, we ,we, we. When its time for bonuses worth 10’s of millions of dollars, it I did this, I did that, I, I. I don’t mean to single our GE, this is pretty much the attitude of the corporate types.
Sales were up 8%.
So what was the big impact on margins? I’d like to see more details. Were there writedowns?
I’d also like to see who bought at $32. Another fleecing, I’m sure.
Expect Immelt to order NBC News to step up the Global Warming scam so they can sell more lightbulbs and power systems. Control the press and you can control your destiny. They’ll use this excuse to fire more people and offshore more work.
A further worry. Many retirement funds, including pension funds are very heavily invested in GE. With a 13% loss today as well as a large loss in the Dow, S&P and the Nasdaq, what kind of rightdown will be necessary for these large retirement and pension funds??
Next week should prove a very interesting bearish week for Wall Street.