Maybe the economy is not quite ready to fall off a cliff quite yet, though it appears to be heading in that direction. At least, that's the message this morning coming from Dow stalwart General Electric Co. (NYSE: GE).

General Electric, whose shares have been pounded lately because of concerns about its financing unit, today reported an in-line quarter.

In a press release, GE Chief Executive Jeffrey Immelt, whose job may be in jeopardy, pointed out that the conglomerate was "on track" to meet its revised -- reduced -- guidance issued September 25. He also pointed out, "We have taken a number of steps to protect investors from the downside risk in financial services, and we have ways to mitigate potential disruptions in infrastructure and media markets, but the environment remains challenging."

GE also plans to sustain its dividend through the end of next year.

"We have big backlogs, great products, stable service revenue, strong operating discipline, an unmatched global position and multiple revenue streams. As a result, the Company is well positioned to perform in a very difficult environment, and our Board has approved our plan to sustain the GE dividend through 2009," Immelt said.

Despite the positive spin, the results were pretty dreadful. Profit from continuing operations fell 12 percent to $4.48 billion, or 45 cents a share, from $5.11 billion, or 50 cents. Many businesses including Global Finance fell by double-digit percentage points. Cash flow from operations plunged 18 percent during the first nine months of the year.

How sad is it that meeting reduced expectations is seen as great news?

Today's Time Warner earnings announcement shows the disappointment that results when shareholders expect a corporate strategy and instead get a conglomerate. With TWX down 1.72% in the earnings announcement's wake, the Chinese water torture continues.  How so?

When a corporate strategy is well-conceived and well-executed, there is a strong economic reason for businesses to be under the same corporate umbrella. Simply put, corporate strategy is about creating value by sharing important capabilities across business units. For example, Wal-Mart gets big volume discounts by purchasing in big quantities from its suppliers. Wal-Mart is also good at measuring what items sell in its stores and which ones don't and stocking the shelves of each store accordingly. Wal-Mart's sustained financial excellence results from its ability to share these capabilities across its discount retailing, grocery, and pharmacy businesses. This sharing gives Wal-Mart a sustainable competitive advantage, keeping its costs below its competitors.

By contrast, a conglomerate holds a diverse collection of businesses among which there is very little sharing. The ostensible reason for the businesses being under the same corporate umbrella is that the different businesses can predictably offset each other's earnings cycles. When one business is down, another one is up and vice versa. The net effect is to smooth earnings.