Ordinarily, when a company announces that it "beat earnings" by $0.25, you don't expect a selloff to ensue. Further, when a company "beats" by as little as a penny, you expect something between a sigh of relief and a mad dash to buy the stock.

Then again, Textron (NYSE:TXT) is no ordinary company. It may be the original bad bank. The anti-Teflon. A tough talker (and poorhouse walker). But ordinary? Never.

As you may have surmised by now, Textron reported its fiscal first-quarter numbers yesterday. On the one hand, the news was good -- in that Textron reported $0.26 per share in pro forma earnings versus Wall Street's expected $0.01. On the other hand:

  • GAAP profits came in at $0.35 per share -- a 62% year-over-year decline.
  • Management cut this year's earnings guidance in half, meaning it may earn as little as a dime a share over the next three quarters.
  • Part of the reason for the lower-than-expected profits: Textron has joined a parade of big-name industrialists -- Cummins (NYSE:CMI), Boeing (NYSE:BA), Caterpillar (NYSE:CAT), and General Motors (NYSE:GM), to name just a few -- in laying off workers in recent months. Severance payments to the workers, and the cost of shuttering factories, are eating into profits.

Meanwhile, free cash flow, already negative a year ago, swelled to 6.8 times more negative in Q1 2009, as Textron burned through $286 million in cash.

Cash, cash -- my kingdom for some cash
Speaking of cash, in a separate release, Textron announced it hopes to float as much as $345 million in new "convertible senior notes," and issue perhaps 21.85 million new common shares. If implemented in full, this should amount to a nearly $585 million cash influx. The news prompted a debt downgrade from Moody's (NYSE:MCO), however. And combined with its earnings woes, this sent Textron shares tumbling 9% in after-hours trading.

Foolish takeaway
One last point that may set off your B.S.-meter*. Management says it will generate $400 million in "manufacturing free cash flow" this year. But if that's true, then why does Textron need to tap the debt markets and seek out new suckers -- er, shareholders?

One clue: As recently as three months ago, Textron thought it would generate $450 million.

*Beware, Shareholder.

Fool contributor Rich Smith owns shares of Boeing. Moody's is a Motley Fool Stock Advisor pick and a Motley Fool Inside Value selection. Try any of our Foolish newsletters today, free for 30 days. The Motley Fool has a disclosure policy.