Saturday, January 15, 2011

"General Electric Earnings: What to Expect" (GE)

From TheStreet:
General Electric (GE_) is reporting quarterly earnings on Tuesday, January 18, and analysts and investors expect the good news to continue.

GE shares closed at $18.67 Wednesday, returning 14% over the previous year, although investors had a bit of a wild ride during the first half of 2010.

After peaking at a closing high of $19.50 to celebrate the tax deadline on April 15, the shares slid to a closing low of $13.88 on July 2, then pretty much climbed back for the rest of the year. After raising its quarterly dividend payout by two cents to 12 cents a share in July, the company repeated the action in December and based on the 14-cent quarterly payout, the shares now have a dividend yield of 3.00%.

GE had a war chest of $78 billion in cash and equivalents at the end of the third quarter and put some of the money to work in October, when it as agreed to acquire energy infrastructure firm Dresser for $3 billion. GE Capital also purchased a retail credit card portfolio from Citigroup (C_) for undisclosed terms. In December, the company made another energy infrastructure acquisition, agreeing to purchase deep-sea pipeline manufacturer Wellstream for $1.3 billion.

CEO Jeff Immelt said on December 14 that GE would redeem the $3 billion in preferred shares held by Warren Buffett's Berkshire Hathaway in October 2011. The shares -- which Berkshire purchased in October 2008 -- have a hefty 10% coupon and while retiring the shares will cost GE a premium of $300 million, it will also save the company $75 million per quarter in interest payments.

In December GE also said it expected the second phase of the Hudson River dredging project in New York would result in an after-tax charge of $500 million during the fourth quarter, which the company expected would be offset by "positive items, including a favorable tax settlement."


The average estimate among analysts polled by Thomson Reuters is for GE to report fourth-quarter net income of 32 cents a share, following third-quarter earnings from continued operations of $3.3 billion, or 29 cents a share, which beat the third-quarter estimate of 27 cents a share....MUCH MORE