Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



Capital Unit Pummels GE

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

The current earnings season seems far heavier on disappointments than positive surprises. General Electric (NYSE: GE  ) falls somewhere in the middle; its results didn't knock our socks off, but the company did live up to expectations. (Kudos to the company, at least, for the solid guidance it's provided thus far.)

For the quarter, GE checked in with a profit of $3.72 billion. That's a 44% plunge from its $6.7 billion in net earnings from a year ago. Earnings per share fell for the same period by 47%, from $0.66 per share to $0.35. Overall, firmwide revenue slipped almost 5% to $46.21 billion.

Unsurprisingly, the Capital Finance segment posted the biggest decline; profits slid by 67%, on a 17% dip in revenue. The unit, which accounted for roughly 40% of GE's Q4 2007 profits, has been pared back to represent a mere 16% of earnings for Q4 2008.

Meanwhile, the Technology Infrastructure unit and its Energy Infrastructure sibling both grew by varying degrees. The energy group led the parade, with revenue growth of 21% and profits that rose 11%. My only concern about that unit involves the possible long-term effects of sliding oil and gas prices on its book of business.

GE, which is pulling back on providing quantitative earnings and profit guidance, has also said it would cut jobs across its various operations this year. It joins oilfield services provider Schlumberger (NYSE: SLB  ) , Big Oil's ConocoPhillips (NYSE: COP  ) , and plastics and paper maker MeadWestvaco (NYSE: MVW  ) in reducing its workforce to contend with worldwide economic softness.

At the same time, General Electric CEO Jeffrey Immelt clearly remains determined to maintain his company's triple-A credit rating and $1.24-per-share annual dividend. At the company's current share price -- down about 60% during the past year -- that payout provides a 9.5% yield.

Though Immelt and his minions clearly are working feverishly to revitalize and rebalance GE, I'd keep the company at arm's length until the ticking time bomb that is GE Capital gets safely detonated. Meanwhile, I'll be closely watching for earnings reports next week from Caterpillar (NYSE: CAT  ) and U.S. Steel (NYSE: X  ) , both of which will provide more clarity to our world's disintegrating industrial picture.

GE maintains a four-star rating among Motley Fools CAPS members. Why not add your opinion to the mix?

Generally electrifying further Foolishness:

Johnson & Johnson is a Motley Fool Income Investor pick. Try any of our Foolish newsletters today, free for 30 days.

Fool contributor David Lee Smith doesn't own shares in any of the companies mentioned. He does, however, welcome your comments or questions. The Fool has a capital disclosure policy.

Read/Post Comments (1) | Recommend This Article (12)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 24, 2009, at 5:34 AM, Bronscap wrote:

    They said they won't cut the dividend. But as it looks right now I won't be surprised if they pay a higher dividend than 2009 profits.

Add your comment.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 816163, ~/Articles/ArticleHandler.aspx, 10/22/2016 9:29:05 PM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,145.71 -16.64 -0.09%
S&P 500 2,141.16 -0.18 -0.01%
NASD 5,257.40 15.57 0.30%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

10/21/2016 4:00 PM
GE $28.98 Down -0.09 -0.31%
General Electric CAPS Rating: ****
CAT $86.33 Down -0.30 -0.35%
Caterpillar CAPS Rating: ***
COP $41.54 Up +0.05 +0.12%
ConocoPhillips CAPS Rating: ****
SLB $80.47 Down -2.52 -3.04%
Schlumberger CAPS Rating: ****
X $19.78 Up +0.32 +1.64%
United States Stee… CAPS Rating: **