Oct. 19 - Dow bellwethers General Electric and McDonald's miss analyst estimates as a weak global economy takes a toll on their bottom lines. Jill Bennett reports.
PLEASE NOTE: THIS EDIT CONTAINS CONVERTED 4:3 MATERIAL The golden arches dimmed over the past three months as competition and the weak global economy weighed on McDonald's bottom line. Industrial behemoth and fellow bellwether General Electric also felt the pinch. It missed analysts estimates as it continues to shrink GE Capital, its finance unit. Hilary Kramer, Editor, GameChangerStocks.com: SOUNDBITE: HILARY KRAMER, EDITOR, GAMECHANGERSTOCKS.COM (ENGLISH) SAYING: "The surprise was that GE was willing to be so negative when it came to 2013 and their expectations for that financial arm." The stock fell on the news Friday. It has some run to play with...it's gained about 40 percent in the past year. McDonald's stock also under pressure, as investors combed through the numbers. R.J. Hottovy, Senior Restaurant Analyst at Morningstar: SOUNDBITE: R.J. HOTTOVY, SENIOR RESTAURANT ANALYST, MORNINGSTAR (ENGLISH) SAYING: "I think you are starting to see macroeconomic pressures where consumers gravitate to value prices items on menus that's going to have a negative impact on gross margins and we're seeing some of that. We are also seeing a much more competitive environment in the restaurant space." Burger King has jumped on some of McDonald's popular offerings, and other fast casual restaurants are clamoring for hungry customers. While overseas restaurants face tighter wallets. SOUNDBITE: R.J. HOTTOVY, SENIOR RESTAURANT ANALYST, MORNINGSTAR (ENGLISH) SAYING: "It's a very value fixated consumer in Europe with the austerity measures there as well as a lot of uncertainty in the Chinese market that's weighing on not only top line results but also having a negative impact on the bottom line as well." McDonald's is not alone. SOUNDBITE: HILARY KRAMER, EDITOR, GAMECHANGERSTOCKS.COM (ENGLISH) SAYING: "The bigger problem of course for GE and all of the companies that provide industrial products and services and have large infrastructure products is China because we know we have a slowdown in China, on transportation and on energy but the good news these are long business cycles and General Electric has actually come through this very well." While these large companies are trying to dodge the overseas bullets, inaction in Washington D.C. on tax issues may add to the assault in 2013. Jill Bennett, Reuters