This is a securities class action lawsuit against General Electric and certain officers and directors.
The class action lawsuit alleges that at the beginning of the Class Period General Electric assured investors that General Electric would hit its financial goals for 2008 and, with respect to General Electric's financial services businesses, differentiated itself from other financial service providers, noting it could "withstand a market slowdown in the U.S. and still grow earnings." General Electric reaffirmed 2008 guidance of "hitting 10% EPS growth, getting $2.42 a share or greater."
The class action complaint alleges that these statements to investors were false when made because General Electric failed to disclose the following adverse facts, among others, which they knew or recklessly disregarded:
(i) that General Electric's financial services division was not performing as well as previously stated and that the division's investments had materially declined in value and would require General Electric to record mark-to-market losses and recognize certain asset impairments;
(ii) that General Electric was depending on the sale of $900 million in real estate assets during the last two weeks of the first quarter of 2008 in order to achieve a gain of approximately $100 million; and
(iii) demand for products in General Electric's Consumer and Industrial Division had materially declined.
Just a few short weeks after General Electric's assurances regarding its earnings guidance, on April 11, 2008, General Electric shocked the market when it reported materially worse results for the quarter ended March 31, 2008 than it previously promised, substantially lowered 2008 full year EPS guidance and cut its growth estimate for the year from 5-10% to 0-5%. Indeed, as alleged, instead of the $0.50-0.53 EPS General Electric had promised for the first quarter, General Electric reported EPS of $0.44 for the quarter and lowered EPS guidance for 2008 from $2.42 to $2.20-2.30.
On this news, it is alleged that on April 11, 2008 the price of GE shares declined $4.70 per share -- a one day decline of almost 13%, on heavy trading volume.
Name (Stock Symbol)
General Electric Company (GE)
General Electric Company operates as a technology, media, and financial services company worldwide.
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