Justice Sirikah

Finance and Entertainment Units Propels General Electric Company (NYSE: GE) to Q1 Loss

by Justice Sirikah April 21, 2009
General Electric Company (NYSE: GE) surpassed its 52 week’s lowest share price by more than two-fold to $12.39, on Friday last week upon the release of its meager first quarter 2009 financial results, which however,  outperformed the average Wall Street estimates. The diversified transnational conglomerate that is used as a yardstick by which the U.S economy is measured, reported that the decline of the profits for the period is mainly attributable to its finance, health-care and 3ge_logo.pngentertainment arms.

   As if this was not enough, at some stage in the first quarter, GE was forced to cut its quarterly dividend payment for the first time in more than 70 years, and both Moody’s Investors and Standard & Poor’s downgraded its ‘AAA’ credit rating.

  While analysts had anticipated an average profit of $0.21 per share for the first quarter of 2009, the actual net income declared by GE arrived at $2.8 billion ($0.26 per diluted share). This represented a 36 percent tumble from $4.3 billion ($0.43 per share) of the same financial period in 2008. The company also said it realised net total revenue of $38.4 billion, nine percent down from $42.23 in the first quarter of a year ago. $8.24 billion of the overall revenue was contributed by the company’s energy enterprise, the only one of all the business units that saw an increase of returns.

  Affected mostly by loan delinquencies, GE Capital, the firm’s financial unit experienced the worst dip in profits and revenue for the first quarter of 2009. Its profit was down 60 percent, to $1 billion, and its revenue came down to $14.4 billion, which equates to a 20 percent decline. GE’s media business at NBC recorded a 45 percent descend of profits to $391 million on the deterioration of advertising due to recession.

  By the time of encoding this article, GE stock had plummeted by 8.64 percent, to $11.31.
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Resources:
http://www.ge.com/

 

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