General Electric Corp. [GE] surprisingly stunned investors with its announcement Friday that it did not meet analyst's first-quarter earnings expectations after its CEO just last month assured investors that it would meet the original forecast. The disappointment, which GE blames on the tightening of credit markets, sent shares of the conglomerate sinking as much as 12% in midday Friday trading, the most since the October 1987 market crash. GE's decline set the tone for a down market as the Dow fell 151.12, or 1.21% to 12,429.72, and the Nasdaq decreased 34.53, or 1.47%, to 2,317.17. Meanwhile, new developments in pending mergers also affected the performance of these Deal Stocks in Friday midday trading.
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GE reported its first quarterly decline in profit since 2003. Profit from continuing operations dropped to $4.36 billion, or 44 cents a share, from $4.93 billion, or 48 cents, a year earlier. GE was expected to earn 51 cents a share, according to analyst expectations. The conglomerate pointed out that the tightening of the markets caused it to cut the value of some securities because of slowing demand and blocking some asset sales.
Meanwhile, Google Inc. [GOOG] pulled back slightly as the tech giant reportedly hired Qatalyst Group, a Frank Quattrone's investment bank, to provide advice on the ongoing battle between Microsoft Corp. and Yahoo! Inc.
However, all was not gloomy on the markets for Deal Stocks as healthcare management company TriZetto Group Inc. [TZIX] shot up nearly 14% on news it is being acquired by buyout shop Apax Partners for $1.4 billion. Shareholders will receive $22 per share in cash, representing a 25% premium over TriZetto's closing price Thursday of $17.67, said the company in a statement.
Lastly, Delta Air Lines Inc. [DAL] was up slightly as the company reportedly reached a tentative agreement with its pilot union, which would aid in a possible merger with Northwest Airlines Corp.[NWA]. - Gerald Magpily
See Bloomberg article
See April 9 Dealscape posting on Delta-Northwest
