General Electric Beats Consensus

General Electric Company (GE) reported earnings per share of 22 cents for the third quarter of 2009, beating the Zacks Consensus Estimate of 20 cents.

The reported earnings include the effect of 5 cents per share in restructuring and other charges, down 51% from the third quarter of 2008. We consider these charges to be an integral part of continuing operations, and hence no adjustments have been made.

Industrial segment profit grew 4% in the quarter compared to the year-ago period. Cash generated from GE Industrial operating activities totaled $4.4 billion in the quarter and $11.5 billion year to date, up 1%. Total company backlog of equipment and services grew 2% to $174 billion over the prior quarter, an all-time high.

Industrial segment profit grew 4% versus the third quarter of last year. An 11% increase in Energy Infrastructure earnings and NBC Universal’s 13% earnings growth more than offset an 8% decrease in Technology Infrastructure’s earnings. These, combined with 149% growth in Consumer & Industrial earnings, partially offset continued pressure at Capital Finance, where profit decreased 87% for the quarter compared to a year ago.

Revenues fell 20% to $37.8 billion. This was lower than the Zacks Consensus Estimate of $39.8 billion. GECS revenues fell 31% versus last year to $12.7 billion. Industrial sales were $25.1 billion, down 13% from the third quarter of 2008. Industrial sales were down 13%. Industrial organic sales, which exclude the impact of currencies and the 2008 Olympics, were down 8%.

GE Capital Services revenues declined 31%, driven by Capital Finance ending net investment reduction ahead of plan and the Penske Truck Leasing Co., L.P. deconsolidation.

GE generated $18.4 billion in Infrastructure orders, a decline of 18% year-over-year, and an increase of $0.5 billion over the previous quarter. High-margin service orders continued to provide counter-cyclical balance and support future growth, increasing 3% year-over-year.

All segments of GE Capital were profitable in the quarter with the exception of Real Estate, which is experiencing a tough macroeconomic environment.

Cash generated from GE Industrial operating activities in the first nine months of 2009 totaled $11.5 billion, up 1% from $11.3 billion last year. Cash and equivalents were $114 billion, total borrowings were $518 billion while shareowner’s equity was at $118 billion at the end of the third quarter.

We currently have a Neutral recommendation on GE.

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