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GE losses create credibility issue

NEW YORK , April 17 (UPI) -- General Electric's credibility took a step backwards on its first-quarter report, market observers said.

"There is no doubt that this is a historic event," J.P. Morgan Chase analyst Steve Tusa, said in a New York Times report Thursday.

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The report took investors by surprise, not simply by a drop in earnings, but by the company's estimates, which historically have been right on the money.

In December Chief Executive Jeffrey R. Immelt said an earnings growth of 10 percent in 2008 was "in the bag." In March he reassured investors the company would hit its targets, the Times reported.

"I've been covering the company since 1996, and I've never seen a miss this big," Nicole Parent of Credit Suisse told the Times. "You have to ask what is the driving force behind the miss?"

The company's first-quarter report showed net earnings, at $4.3 billion, down 2 percent from the previous year.

Immelt responded to the controversy, saying: "I'm not making excuses for the quarter."

"We will see what we can do better on forecasting and communicating," he said. "But you don't rebuild credibility by talking about it. The execution of the balance of 2008 will be strong.

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