General Electric's ( GE) share price tumbled in early trading this morning despite the fact that it beat estimates in its quarterly earnings report today. Shares stabilized after the open and have been flat since.I attempted to cover the call by sending 15 emails to my overworked editor in the space of about an hour, while he coded and posted them. Thanks, Mike! Anyway, here's what I came up with. I don't claim to be an expert on GE, but I do attempt to follow the company and I do claim to give you my honest view, which is more than you'll get from most experts. ( At 8:40 a.m. EDT) Due to technological difficulties, I'm 5 minutes late. Not sure who's talking: I assume Keith Sherin, the CFO. First words I hear are: "There's still some volatility." Here's a list of words that should be banned from earnings calls: volatility, cautious, near-term, longer-term, headwinds. Aha! He says something that actually means something: "Margin headwinds at NBC" says they'll go through that later. "Wind hung in there almost flat for the quarter." "Real headwind in health care." ( At 8:42 a.m. EDT) Several BRIC (Brazil, Russia, India, China) projects will break in the second quarter. ( At 8:44 a.m. EDT) Lots of discussion of Iraq-related business. I hadn't even thought about this. Something sinister about the contrast between boring GE ( GE) and way-too-exciting death and destruction in Iraq. (I know, things are improving, only probably a couple Iraqis blown up a week. Thanks, GE!) ( At 8:48 a.m. EDT) This same gentleman I haven't identified yet but who is probably Sherin -- aha, turns out it was Immelt himself. Sorry, Jeff! Anyway, Immelt said something like: "That shows how serious we take having a very stable balance sheet." Thanks, Jeff. You never seemed unserious about anything to me, but then we've never met. Now here's Keith. This should be fun. I just love numbers!
( At 8:54 a.m. EDT) Got distracted for a sec: Now Keith is talking real estate. There was a $32 million writedown for something called FIJIC. This is a prime example of how confusing GE is: 1. what is FIJIC? 2. $32 million is peanuts to GE. Should I be concerned about this? Back to words that should be banned: environment, cycle. ( At 8:56 a.m. EDT) Consumer loan something or other is down 15 billion. Now that's a big number! Too bad I didn't quite catch what exactly is down, and from when to when. ( At 8:57 a.m. EDT) Commercial real estate lost $173 million in the quarter. Again, peanuts to GE! (Right?) ( At 9:01 a.m. EDT) They've been selling down something called PENSKI. Doesn't sound like fun. Just heard another word that should be banned but forgot. I'm sure I'll hear it again soon. Now they're talking about basis points. I'm getting hot! And here are non-earnings and non-mortgage. I swear he keeps saying that so he must be serious. Non-earnings? What in the world is that, Keith? ( At 9:04 a.m. EDT) Now Keith is talking about coverage rates. I think this has to do with ... actually, never mind, I don't know what that is. I probably should've studied accounting. Sorry Keith. ( At 9:06 a.m. EDT) I swear it is blowing me away the number of times Keith says "non-earnings." I am serious: What is this gibberish?
( At 9:09 a.m. EDT) They are "evaluating the PPIP., being an investor in that." There's an acronym I recognize! It's l'il Timmy Geithner's plan! Way to go Timmy! Has GE said this before? This might be news, although you'd kind of expect GE to at least be evaluating PPIP. ( At 9:12 a.m. EDT) Now Keith is talking about the problems in CNBC, just as Jeff promised. Way to deliver guys. Unfortunately I missed most of what Keith said, except that "the Super Bowl was expensive." And I guess the Bourne movies did well. I really like those. I guess GE isn't all bad. ( At 9:15 a.m. EDT) Lots of numbers. Whew, Keith must have gotten straight A's in math. He spits out numbers faster than...I dunno...really fast!
( At 9:26 a.m. EDT) Now Keith is talking about the energy business. He's mentioning something about "the Iraq order." Interesting that this Iraq business is classified under energy. Who'dathunkit? Now we're back to Jeff for a wrap up. Let's ban that too. You can't wrap up GE earnings. It's not a package. They are running GE Capital to be safe and secure. Wonder how many times they've said that. I think they should start running it to be dangerous and scary. Some would probably argue that's what they've been doing for several years now. Me? No idea. "We're going to keep this drumbeat up of transparency and disclosure." That is an odd sentence. Here's questions. For the uninitiated, this is really the only part of conference calls worth listening to. First up is Nicole Parent, (pronounced "PA-RAAAHNT" with emphasis on second syllable) from Credit Suisse. I made fun of her in a story I wrote yesterday. Hearing her voice makes me feel guilty. People are so much more likeable and interesting than the reports they write. Too bad I totally missed her question. ( At 9:34 a.m. EDT) They're still answering Nicole: Jeff is bullish on some government program, I think it was health care IT. Here's Jeff Sprague from Citi: He's asking about taxes. This is a BIG DEAL, as I mentioned yesterday. There really does seem to be a good chance that tax laws are going to change, and big several companies, including McDonalds ( MCD), are affected. Nick Heymann, analyst at Sterne Agee, told me GE does something clever with taxes that it sounds like they may not be able to do anymore. I believe what they do is take all foreign losses in the U.S. Basically, tax rates are different for foreign vs. U.S. earnings. So now Nick tells me all the analysts and investors are going to be picking through the numbers trying to figure out what earnings will be if these sneaky tax moves are no longer permitted. Again, took me so long to write that I missed the question and answer. But here's Terry Darling of Goldman and he's also asking about taxes. So Nick was right! ( At 9:52 a.m. EDT) Jeff and Keith are being pressed on whether GE will be subject to a stress test. Boy, Keith and Jeff sound very nervous and extra-serious while they talk about the stress test. They really do have similar voices. I wonder if they're both from the Midwest. Sounds like it. I bet it's an unconscious thing on Keith's part. He probably has gradually, over time, learned to talk like Jeff, hoping that this will help him in his career. Again, this is an unconscious operation. (Sorry, my father is a psychoanalyst). Now here's Steven Winoker of Sanford Bernstein. He's asking about inventory. The GE guys say energy infrastructure is strong so they can keep a bigger inventory. Here's something else very confusing about GE, and I'm sure it's true for all big industrial companies: They get these massive orders that take months from the time they're made until they're paid (or not paid). I'm sure that the whole enterprise of assessing how these business are doing and whether customers are paying up is really, really difficult. ( At 10:57 a.m. EDT) Technological difficulties caused me to miss the end of the call. Anyway, hope you had as much fun as I did.