General Electric - GE 2nd Quarter Company Earnings - by BetterTrades

Announcing prior to the opening bell on July 17, one of the world’s largest diversified technology, media, and financial service companies, General Electric Co. (GE) confirmed that the company’s profits for the 2Q were dragged down by a sharp decline in overall revenues. The leading culprit for the decline came from GE’s Capital Finance unit, which saw sales plunge 29% during the quarter.

For the recent period, GE reported net income of $2.6B, or $0.24 per share, compared to the previous year’s 2Q profits of $5.1B, or $0.51 per share, a decrease in earnings year-over-year of more than 49%.

Quarterly sales declined as well, falling from $46.84B to $39.08B, a drop in total revenues of nearly 17%. Analysts, meanwhile, were looking for quarterly results of $0.23 per share on overall sales of $42.16B.

Looking inside the company’s individual operating segments, GE’s Energy and Technology units generated $3.6B in total earnings, relatively flat year-over-year. The company’s Energy Infrastructure posted a 13% increase in earnings, while their Technology unit recorded an 11% decrease.

The leading deterrent to overall earnings came from GE’s Capital unit, dropping more than 80%, posting revenues of $590M. In the company’s Universal segment, GE posted a 41% decline in quarterly earnings due to weak television advertising, as sales within the unit slipped from $3.88B to $3.57B.

Sales generated from their Energy Infrastructure were $9.58B, down marginally from the previous year’s tally of $9.67B. Meanwhile, sales from their Technology unit was $10.56, down from the previous year’s total of $11.85B.

In GE’s Finance division, the unit generated $12.8B, nearly 29% lower than the prior year’s total of $17.98B. In their Consumer and Industrial unit, quarterly sales came in at $2.51B, down more than 20% from last year’s total of $3.14B.

"We are executing through the recession by aggressively controlling costs and driving working capital improvements while continuing to invest for future growth. At the same time, we are actively maintaining our backlog, focusing on higher-margin services and continuing to run our financial services business for safety and soundness," commented Jeff Immelt, Chairman and CEO at GE.

Overall sales from the company’s goods and services produced $26.08B, down more than 7% from last year’s tally of $28.1B. As for revenues from their Capital Services division, GE booked net sales of $12.97B, down from $18.17B, nearly a 29% decline.

Immelt went on to state, "Our service businesses had positive order and earnings growth in the first half of 2009, and we see this strength carrying over to the second half. Global growth continued to be strong: second-quarter industrial revenues grew 31% in China, 46% in India, and 10% in the Middle East. In addition, we are targeting 400 global stimulus projects in areas where there are appropriations for nearly $200 billion. While we have only realized limited revenue to date, we believe that activity will increase in the second half of 2009."

Results from the first half of the year showed that GE has posted net income of $5.58B, or $0.50 per share, down dramatically from last year’s six-month totals of $9.72B, or $0.94 per share, a decrease of nearly 43%.

Meanwhile, the first two quarters of the year generated gross revenues of $77.49B, down more than 13% over last year’s results of $89.07B.

"We have substantially increased our capital ratios, reduced leverage, increased reserves, accelerated long-term debt funding and lowered commercial paper balances," Immelt added.

As the overall impact of the economic recession continues to deteriorate earnings from countless companies, it has been rumored that GE may spin-off their finance unit. Inside the finance segment, GE’s Real Estate division, which provides loans on commercial properties and owns office building, posted a loss of $273M compared to last year’s gain of $484M.

By the sound of the closing bell in the July 17 trading session, shares of General Electric dipped 6%, losing $0.75 to end the week at $11.65 per share. Over the past year, GE shares have traded as high as $30.39 and as low as $5.87.

By BetterTrades