Thursday, January 21, 2010

General Electric Co. (NYSE: GE): Q4 Earnings Preview 2009

. Thursday, January 21, 2010

By Stock Wizard

General Electric Co. (NYSE: GE), the world's biggest maker of jet engines and electric turbines, is scheduled to release its fourth quarter earnings for 2009 before the opening bell on Friday, January 22, 2010. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $40.02 billion. In the year ago period, the company reported earnings of 36 cents per share on revenue of $46.21 billion.

General Electric Company operates as a technology, media, and financial services company worldwide, with products & services ranging from aircraft engines, power generation, water processing & security technology to medical imaging, business & consumer financing, media content & industrial products.

In October, the Fairfield, Connecticut-based company reported that its third quarter net income declined to $2.41 billion or $0.23 per share, compared to $4.31 billion or $0.43 in the prior-year quarter. Revenue dropped to $37.80 billion from $47.23 billion in the prior year quarter. Analyst, on average, expected the company to report earnings of $0.20 per share on revenue of $39.50 billion.

The company was hit hard hard by the severe recession as its Capital Finance segment saw its Commercial Lending and Leasing, Consumer and Real estate activities being hit by the economic woes. Third quarter revenue from GECS slumped to $12.746 billion from $18.431 billion in the prior year. However, it appears that worst may be behind the the largest US conglomerate. The company is now shrinking its Capital Finance business and has restructured the unit's funding profile. In December, General Electric said that earnings from its finance unit would be flat next year, with an expected peak in credit losses paving the way for an improvement in 2011. The real estate division of GE Capital has about $7 billion in unrealized losses and values were forecast to decline 13 percent in 2010, the company said in December. "We have positioned the company for solid earnings and cash-flow growth in the future," GE Chairman and CEO Jeffrey Immelt said last month. According to the company, the coming quarters, including the fourth one, are expect to reflect gains from stimulus programs, especially in technology infrastructure and health care segment.

On the other hand, GE's industrial segment has been doing pretty well. Profit at industrial segment was up 4% while backlog grew by $5 billion in the third quarter.

Among other developments, the diversified US firm agreed to sell its security business to United Technologies Corp. (NYSE: UTX) for $1.8 billion in November. Early in December, GE finalized a deal to sell a majority stake in NBC Universal for $13.75 billion, which it controlled NBC since 1986 to Comcast Corp. (NASDAQ: CMCSA), for a total of $13.75 billion. The deal will create a joint venture, with G.E. owning 49 percent and Comcast owning the rest.

The company's stock currently trades at a forward P/E (fye 31-Dec-10) of 17.70 and PEG ratio (5 yr expected) of 1.67. In terms of stock performance, GE shares have gained nearly 28% over the past year.

Full Disclosure: None.

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