Market Updates
GE Drops 10%, Raises $12.2 Billion
123jump.com Staff
02 Oct, 2008
New York City
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General Electric completed its $12.2 billion in public offering after denying for months that it needs outside capital. The offering will help the financial services company to build its reserve and help the engineering giant in preserving its AAA rating.
[R]10:30 AM New York – General Electric completes $12.2 billion in public offering today.[/R]
General Electric raised $12.2 billion this morning before the market opening in a public offering that sold 547.83 million shares at $22.25 a share.
The stock in the morning fell 10% or $2.25 to $22.26.
General Electric chief executive at the time of second quarter earnings call conference call suggested that the company does not need outside capital and repeated the statement again less than ten days ago. However, nervous investors bracing for more losses dragged the stock lower and did not put faith in the management assertions.
GE is a conglomerate of more than ten businesses that are hard to get arms around for most investors. The company has lowered earnings guidance this year and also missed earnings estimate earlier in the first quarter.
GE stock last traded near $60 at its peak during the time of Internet bubble and since then has steadily declined to $22.20, a 10-year low.
The new public offering is expected to reduce earnings per share by 5% based on the additional shares.
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