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General Electric Company (NYSE: GE) Q3 Earnings Fall from Grace; Shares Retreat in Sync

Contributed by: Justice Sirikah
Date: Oct 19, 2009

GE Capital, the financial arm of General Electric Company (NYSE: GE, GE message board), all but singlehandedly stirred up a resounding third quarter earnings decline for the conglomerate amid a bout of recession, driving its shares down a notch. All the same, the profit results for the period pulled off a surprise on Street expectations with the help of $1 billion worth tax credit, financial results released on Friday revealed. Meanwhile, GE affirmed their intentions to spin off a majority stake of its NBC Universal entertainment division.

GE’s quarterly consolidated net profit tanked to $2.4 billion ($0.23 per share), as its finance arm reported a drop of 87 percent, earning $263 million from $2 billion booked in the tallying period of 2008.

Total net income for the quarter ended September 30 reflects a shortfall of 47 percent from $4.31 billion ($0.43 per share) that had been achieved in 2008, however at the same time beating average analysts’ forecast of $0.20 per share. The figure for the just-ended period includes restructuring charges of $600 million ($0.05 per share).

During a post mortem of the results, GE chairman and CEO Jeff Immelt commented: “We continue to execute on our plan at Capital Finance, perform well in a slow-growth industrial environment and strengthen the balance sheet with strong cash generation. We’re aggressively controlling costs, increasing our industrial backlog while expanding margins, and capitalizing on strong services performance”.

Overall revenue for the third quarter failed to reinforce Wall Street’s expectation of $40.2 billion, sliding 20 percent from a year ago to hit $37.8 billion. GE Capital was responsible for almost a third of total sales, yet recording a 30 percent fall off year-over-year to $12.2 billion. Concurrently, the company also said its orders for jet engines, power plant turbines and other equipment, which reflect future sales plunged18 percent. GE shares closed down Friday's regular session trading at $16.08, from a previous price of $16.79.