General Electric Earnings Rise 14% as Capital Finance Unit Rebounds
GE's second quarter revenue dropped 4%, compared to a year ago, to $37.4 billion, versus analysts' estimates of $38.4 billion. The company attributed the revenue dip to fewer GE Capital Assets, industrial dispositions and lower equipment sales.
Concerning its earnings outlook, GE said, "The company continues to generate strong cash flow, which we will invest strategically to create shareholder value, while keeping the company safe. We expect to grow earnings and dividends in 2011 and beyond." However, the company did not provide 2010 earnings guidance in its second-quarter report. Analysts expect GE to earn $1.32 in 2010.
GE's bottom line was aided by continued cost-cutting, which reduced expenses by about $3 billion. Further, positive items were offset by charges in the quarter. After-tax gains of a penny per share were offset by a penny per share in after-tax restructuring and other charges.
Shares of GE were up 21 cents to $15.48 in pre-market trading Friday, but they were falling along with the overall market soon after the open.
The industrial giant reported that total orders rose 8% or by $19.2 billion in the quarter, with equipment orders up 17%, including a 20% growth in energy infrastructure orders, and 14% growth in technology infrastructure orders. The company also reported cash and cash equivalents of $74 billion.
In the second quarter, NBC Universal's earnings jumped 13%, energy infrastructure profits rose 3%, while technology infrastructure profits fell 11%.
CEO Immelt: Solid Quarter
"GE's portfolio generated solid results across the board," GE CEO Jeff Immelt said in a statement. "Our Energy and Technology Infrastructure businesses performed as expected, Home & Business Solutions and NBCU turned in good revenue and earnings growth."
No report on GE would be complete without an update on GE Capital Finance, and on that front, the news is good, as the capital unit's profits surged 93%. The company added that "GE Capital losses have peak and earnings are rebounding."
Jim Hardesty, president of Hardesty Capital Management, was impressed by GE's second quarter.
"GE is on track again. This is a company that had become somewhat dependent on financial services," Hardesty told Bloomberg Television Friday. "I think that there were improvements in most of their cyclical businesses. Their international businesses have performed very well."