It was bound to happen, right? After the business media all but ignored the impact of General Electric's (GE) - Get General Electric Company (GE) Report financial services division, we now have examples of the their ignoring the industrial side of the company. Please. Hit The Business Press Maven in the head with a soft white light bulb.
Look: For years, General Electric hit its numbers with uncanny accuracy, and while making a paper hero out of its leader, Jack Welch, the business media never pointed out that Welch's financial services division, which contributed mightily to profits, offered, shall we say, a bit of leeway in the profit department.
Even as recently as this past April, as The Business Press Maven pointed out in an article called "
GE Brought Bad Coverage to Life
," the business press was looking toward General Electric's coming earnings report with great excitement and anticipation, not factoring in that it was royally screwed for the same reason that all other financial service companies were royally screwed.
I explained with typical brilliance and foresight in my lead:
"Can we all agree now that a savvy investor still has no solid reason to rely on financial stocks delivering anything but disappointment? We might further agree that until the business media realize it is not recovery, but another regrettable earnings report, lurking around every corner, investors are not going to be safe.
"Take the ridiculously overconfident coverage leading up to GE's outhouse of a report.
"The business media raised false expectations for results that were -- shockingly -- ruined by their financial service business."
And now? Guess what? You know what is coming, right? After reporting on financial service industry trouble 24/7, the business media have come full circle. Or half circle. Or whatever you want to call it. We've actually seen examples -- in
, for example -- of the business media's writing about General Electric while
mentioning financial services. Not the industrial side that, uh, also contributes a big chunk to the company's profits.
article, called "
," makes zero mention of the industrial side of the business, which its CEO spoke about with great promise. Believe his confident claims or not, it seems worth a mention, no? Well, not according to
"General Electric is the latest levered-up financial company to hit the wall. The Fairfield, Conn., conglomerate guided to weaker-than-expected earnings for the third quarter and year, citing the "unprecedented weakness and volatility in the financial services markets" in which it earns much of its profit. ... The shortfall is the second in three quarters for GE, which saw its shares hammered this spring after a first-quarter earnings miss that the company blamed in part on an inability to sell financial assets in a turbulent market. ... Now, nearly six months later, Immelt has more than a credibility problem: He has a leverage problem of the sort that brought down Lehman Brothers and nearly crushed
Look at what a better job
did on behalf of you, the savvy investor, in an article of similar size, this one called "
GE Braced For Pain
." It started, appropriately enough, with the financial side: "There is more pain in the pipeline for GE Capital, and its parent company has a lowered full-year outlook to show for it."
But it did not leave out the industrial side, also doing you a favor by mentioning CEO Immelt's claims without reflexively swallowing them hook, line and sinker:
"In a morning interview on CNBC, Immelt assured investors that the firm's industrial businesses--which make railroad locomotives and wind turbines used to generate electricity--are both positioned to grow. This is assuming of course that the once red-hot developing economies do not continue to cool.
"'Are the emerging economies outside of the United States and Europe going to remain strong enough to sustain the earnings expectations of the likes of GE?' asked Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio. 'If they have to come back and re-evaluate that at the end of the year, there will be hell to pay.'"
Anyhow, happy fall. And by that I mean the season, not the act. These days, it's important to make the distinction.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven� column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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