General Electric - GE 1st Quarter Company Earnings - by BetterTrades

As one of the world's most recognizable diversified technology, media, and financial services companies, General Electric (GE) acknowledged before the opening bell on Friday that the company's earnings during the 1Q plummeted more than 36% year-over-year, in lieu of weakened profits in the conglomerate's finance arm.

During the recent quarter, GE recorded net income of $2.74B, or $0.26 per share, down from last year's 1Q profits of $4.3B, or $0.43 per share. Results confirmed the company's continuous woes within their GE Capital division, which includes such operations as commercial real estate and credit cards.

GE Capital, for the quarter, slipped more than 58% in revenues over last year's results, posting total sales of $1.12B, despite increased losses on their loans. Company officials stated that the financial arm is on track to turn a profit by the end of 2009.

Overall revenues for the company totaled $38.41B, down from last year's posting of $42.23B, a decline in sales of more than 9%. First-quarter revenues also came in much lower than GE's 4Q sales figures, down nearly 17% from $46.21B.

Analysts, on average, were anticipating that General Electric would post quarterly earnings of $0.21 per share on total revenues of $39.83B.

GE Chairman and CEO Jeff Immelt commented on the results, "In a recessionary environment impacting every segment of the economy, we delivered first-quarter business results consistent with our GE Capital investor meeting on March 19th and the framework provided last December, which included a smaller but still-profitable GE Capital and 0-5% earnings growth in our Industrial segments."

Looking further into the company's results, GE saw industrial sales decrease marginally, down 1%, while internal growth remained unchanged for the quarter. GE's Capital Service segment, or GECS, retreated by more than 20% over last year's total to $14.4B, as the firm's Capital Finance division posted overall revenues of $1.1B.

With the housing industry still in dire straits, GE's real estate business is suffering as well. During the recent quarter, the unit posted a loss of $173M, in sharp contrast from the previous year's 1Q profit of $476M from the unit.

Immelt went on to add, "Revenues and profitability declined year-over-year in our financial services business and we continue to experience rising delinquencies...We still have a strong rating and our outlook is stable."

"For 2009, we will reduce our costs by more than $5B. We've reduced headcount and are managing company operations more efficiently, leading to improved operating leverage in our infrastructure businesses," Immelt concluded.

There were, however, other business segments throughout the company that saw sales lagging as well, which included GE's Healthcare division, which saw revenues drop 9% year-over-year, along with the Consumer and Industrial segment slipping 22% in overall sales. Within the company's NBC Universal division, sales slipped a more modest 2% as advertising revenues and weakened DVD sales contributed to the decline.

A bright spot for the company was an increase in Energy Infrastructure revenues, which saw an increase in sales of power plant turbines, windmills and other energy related products, posting a 7% advance in revenues to $8.24B. Sales from GE's aviation segment progressed as well, jumping 12% on higher sales of the company's jet engines and repair work on existing equipment.

Moreover, GE also saw revenues increase in other areas of operation as well. Inside their Technology Infrastructure, GE posted a 6% increase in earnings, after costs and expenses were taken out. Overall revenues from the technology unit were $10.44B, down marginally from last year's total of $10.46B.

After posting 4Q results, GE stated that the 2009 earnings season would prove to be very difficult amidst the economic recession. The company estimates that current restructuring activities should reduce costs by the end of fiscal 2009 and beyond. Further projections from the company stated that Infrastructure and Media earnings should increase between breakeven and 5%, while GE's Capital Finance segment is expected to post annual earnings of $5B by the end of the fiscal year.

Since the start of 2009, GE's market value has slipped more than 60% when shares were trading around $17 per share. The stock, back in early March, hit more than a ten-year low of $5.73, but has since rebounded nicely. Additionally, with the collapse of Lehman Brothers last September, GE shares are down more than 75% from its high above $29 per share during that month.

By the sound of the closing bell in Friday's session, shares of GE teetered in an out of positive ground throughout much of the trading day. Yet, by the conclusion, GE stock added 1%, or $0.12, to conclude the day at $12.39 per share. Over the past year, shares have traded in a range between $5.73 and $33.66 per share.

By BetterTrades