UPDATE II: "Analyst Reaction: "GE Earnings: ‘Momentum Play for First Time in a Decade’"
UPDATE I: "Can General Electric Still Manage?" (GE)
In early pre-market trade the stock has bounced around. In a burst of exhuberance there was a print at $20.00, up fifty cents from Thursday's close with the most recent trade at $19.38 down 12 cents.
From Bloomberg via BusinessWeek:
GE Profit Tops Estimates as Energy Unit Earnings Gain
General Electric Co. reported first-quarter profit that topped analysts’ estimates as the finance unit stabilized and industrial equipment and service orders stayed level.Fox News:
Profit from continuing operations fell to 21 cents a share from 26 cents a year earlier, the Fairfield, Connecticut-based company said today in a statement. The results exceeded the 16- cent average estimate of 10 analysts surveyed by Bloomberg. Revenue dropped 4.8 percent to $36.6 billion, trailing analysts’ projections.
Chief Executive Officer Jeffrey Immelt’s efforts to stem loan losses and boost reserves at the finance unit while pouring resources into a more focused lineup of industrial businesses have pushed the shares to the highest since the financial crisis began 18 months ago. The total service and equipment order backlog, used to gauge potential shipments and profitability, was little changed at $174 billion in the first quarter....
GE Energy Infrastructure profit rose even as sales declined. Profit and sales at the GE Technology Infrastructure segment dropped because of fewer locomotive shipments and a decline in the aviation business, which had a one-time gain a year ago. Earnings increased 21 percent and revenue gained 5.3 percent in the unit’s health-care segment....MORE
General Electric Beats Bottom Line Estimate By a Nickel, Possible Future Restructuring
...GE Chairman and CEO Jeff Immelt, said; "We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets."
"We are very encouraged by GE Capital's performance, earning $0.6 billion in the quarter," Immelt said. "We are seeing solid signs of stabilization."
"Our 2010 framework remains achievable with potential for upside," Immelt said. "We may evaluate additional restructuring that will improve our earnings power going forward. We will have substantial cash available for allocation and we expect to grow earnings and dividends in 2011 and beyond."
Another part of Rupert's empire has a similar headline. From MarketWatch:General Electric net down by nearly a third as it eyes revamp
...GE, a component of the Dow Jones Industrial Average, said it may evaluate additional restructuring that will improve earnings power going forward.
"We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets," said Chairman and CEO Jeff Immelt in a statement. He expects earnings and dividends to grow in 2011 and beyond....MORE
An interesting take from 24/7 Wall Street:
Declines At GE May Be Good Enough
As far as General Electric Co. (NYSE: GE) and earnings, we felt as though GE was going have to beat earnings expectations handily to keep the investing public interested after the run up we have witnessed. The conglomerate did turn in a handsome report and shares are not indicated lower. The company reported that earnings from continuing operations was $2.3 billion, or $0.21 EPS. Revenues were down 5% to $36.6 billion. The earnings report is above a Thomson Reuters consensus of $0.16 EPS, but slightly under the revenue estimates of $37.1 billion.
The company noted that the year-over-year revenue drop was primarily due to acceleration of downsizing at GE Capital, as well as the effect of currency exchange rates....
Perhaps the biggest relief is that GE Capital actually MADE $600 million, with pre-tax earnings of $235 million. The company noted that that business is seeing solid signs of stabilization as its losses, delinquencies and its non-earning assets (excluding FAS 167 impact) all declined in the quarter. As we have seen from banks, Ge said that “GE Capital losses seem to have peaked.”
As far as guidance, “GE’s 2010 framework remains achievable with upside potential and we expect to grow earnings for the balance of 2010.”
The company is not committing to formal guidance nor to a solid date on dividends. Jeff Immelt noted, “We may evaluate additional restructuring that will improve our earnings power going forward. We will have substantial cash available for allocation and we expect to grow earnings and dividends in 2011 and beyond.”
- Energy Infrastructure earnings were up 12% at $1.5 billion, while revenue fell 5% to $8.7 billion; Oil & Gas profitability was up 7% and Energy profitability was up 12%.
- Technology Infrastructure earnings fell 18% to $1.4 billion, while revenues was down 9% to $8.6 billion; Healthcare strength offset pressure in Aviation and Transportation.
- Excluding the Olympics, NBC Universal earnings increased 1% to $199 million on revenues that were flat year-over-year.
- Home & Business Solutions earnings rose 58% to $71 million while revenues grew 1%.
The reality is that this is a report that leaves enough for both bulls and bears to grab what they want. Profits and revenues are down, but not out of the ordinary and the bottom line came in above what was expected. The lack of commitment to formal upside and to a formal dividend hike may be a disappointment and our own take is that we really want to see a more formal commitment to that dividend other than a “2011 time frame.”>>>MORE
See also: yesterday's post "General Electric Investors Look Past Finance Rut for Stabilization (GE)" has a lot of links.