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GE earnings lift hopes for economy

By Amarendra Bhushan for CEOWORLD Magazine Updated:April 17, 2009

GE announced today first-quarter 2009 earnings from continuing operations (attributable to GE) of $2.8 billion, or $.26 per share attributable to common shareowners, down 40% from first quarter 2008. First-quarter 2009 revenues from continuing operations were $38.4 billion, down 9% year-over-year.

“In a recessionary environment impacting every segment of the economy, we delivered first-quarter business results consistent with our GE Capital investor meeting on March 19th and the framework provided last December, which included a smaller but still-profitable GE Capital and 0-5% earnings growth in our Industrial segments,” GE Chairman and CEO Jeff Immelt said. “Amid a continued weak economy, we’re performing well and our backlog remains strong.

“Infrastructure and Media earnings together were flat versus last year. Energy Infrastructure grew earnings by 19% while Technology Infrastructure had earnings growth of 6%. While Cable continued to deliver double-digit growth, NBC Universal had a tougher performance overall due to a soft advertising market and fewer major DVD releases compared to a year ago.

“Despite the difficult economy, we generated $19 billion in Infrastructure orders, a decline of 10%. Importantly, high-margin service orders grew 7%. Major equipment and service backlog held approximately flat at $171 billion vs. year-end 2008 and was up 6% versus a year ago.

“Capital Finance earned $1.1 billion in the quarter and remains on track to be profitable for the full year,” Immelt said. “Revenues and profitability declined year-over-year in our financial services business and we continue to experience rising delinquencies. However, we have taken prudent actions to address these challenges, including tightening risk requirements, improving liquidity and reducing leverage. Also, questions about credit ratings have been resolved. We still have a strong rating and our outlook is stable.”

On balance, positive items were mostly offset by charges in the quarter. The Company realized a $0.3 billion after-tax net benefit from transaction gains, marks and impairments and an incremental $0.2 billion tax benefit, which were mostly offset by $0.4 billion in after-tax restructuring and other charges. First-quarter results do not include any impact from the newly issued mark-to-market accounting rules, which we will implement, as required, in the second quarter 2009.

“We are aggressively managing our cost structure to respond to challenging global economic conditions,” Immelt said. “For 2009, we will reduce our costs by more than $5 billion. We’ve reduced headcount and are managing company operations more efficiently, leading to improved operating leverage in our infrastructure businesses.”

· Earnings per share (EPS) of $.26, down 40%; earnings of $2.8 billion, down 35%

· Revenues of $38.4 billion, down 9%; Industrial sales down 1%; financial services revenues down 20%; Industrial organic revenue was flat year-over-year

· Energy Infrastructure earnings grew 19%; Technology Infrastructure earnings grew 6%

· Capital Finance earned $1.1 billion in 1Q and remains on track for profitable 2009

· Capital Finance extended $69 billion of new credit in 1Q

· Total equipment and services backlog steady at $171 billion; 1Q Infrastructure orders totaled $19 billion, down 10%

· Achieved ~93% of planned 2009 long-term debt funding; $47 billion cash and equivalents

· Results do not include any impact from newly issued mark-to-market rules; implementing in 2Q

· Cash generated from operating activities totaled $2.8 billion, on plan

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