GE Bulb Dims Friday on Revenue, Profit Declines

Closing Indexes Summary July 21

The shares tumbled 3.1 percent to $25.87 at 10:59 a.m.in NY after dropping as much as 5.4 percent for the biggest intraday decline since August 2015.

It beat analyst expectations on adjusted profit, but cash flow was weak and GE said full-year profit and cash flow will be at the low end of its forecasts.

Revenue from its power business rose 5%, while health care rose 4% and aviation was flat.

GE has been under intense pressure to cut expenses and pledged in March to cut $1 billion in annual industrial expenses for each of the next two years, which is twice the level of cuts originally laid out. Sales declined 12 percent to $29.6 billion, compared with $29.2 billion expected by analysts.

Corporate Earnings Report July 21
Data courtesy of Trade-Alert

The renewable energy sector unit was the strongest for GE.

"We've reduced our Industrial structural costs year to date by $670 million and we are on track to meet or exceed our $1 billion cost reduction target for the year", Immelt said. Despite the beats, EPS declined from 51 cents in the prior-year quarter while revenue declined 12% from $33.49 billion for the same period.

GE's closely watched cash flow from operations fell 67 percent to $3.6 billion from a year ago, reflecting the loss of contributions from the appliances division that the company sold. The company reported a profit of $1.19 billion, or 15 cents a share, down from $2.76 billion, or 36 cents a share, a year earlier.

"The global scale of the company, along with our ability to innovate industry-leading products and services, will help us navigate the current environment and unlock productivity across our businesses and markets", added Immelt. He is set to be replaced as CEO by John Flannery on August 1. Immelt had promised that the metric would rebound after a surprise $1.6-billion plunge during the first three months of the year rattled shareholders. Immelt announced his resignation last month. On Thursday, it closed just below buy range and near the session low after setting a record high of 136.41.

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