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GE Posts Profit Surge; Capital Arm Nets $1.8B

April 21, 2011 by · Leave a Comment 

General Electric Co. posted a fourth straight quarter of profit growth, beating analysts’ estimates, as equipment orders increased, and boosted the dividend for the third time since July, Bloomberg BusinessWeek reported.

First-quarter profit from continuing operations rose 58% to $3.58 billion, or 33 cents, excluding pension results, up from $2.26 billion, or 20 cents, a year earlier, GE said. That exceeded the average estimate of 28 cents a share from analysts surveyed by Bloomberg.

GE Capital, the company’s lending business, continued to recover from the financial crisis, with profits more than tripling profits to $1.8 billion in the quarter. GE’s transportation, health care, aviation, and home and business solutions businesses also posted increased earnings.

CEO Jeffrey Immelt plans to speed sales and profit growth this year and in 2012 by focusing on energy, aviation, transportation and health care as well as a slimmer GE Capital. He is spending on research and more than $12 billion of acquisitions since October, mostly in energy, as he builds technology offerings and the oil and gas division.

“GE has emerged from the recession a stronger, more competitive company,” Immelt said in the statement.

GE gained 2.9% to $21 at 6:43 a.m. before regular New York Stock Exchange composite trading.

The dividend will rise 1 cent to 15 cents a share payable July 25 to shareholders of record at the close of business on June 20, Fairfield, Connecticut-based GE said.

The company’s total order backlog, a gauge of future profitability, was $177 billion, exceeding the fourth quarter’s $175 billion. Orders at large-equipment divisions including energy, aviation and health care rose 13 percent to $19 billion.

Sales Rise

Sales rose 6.2% to $38.4 billion, helped by more selling days as the quarter ended April 3 rather than March 28 a year earlier. Revenue included proceeds from the disposition of NBC.

“A few extra days will not normally make much of a difference in the big lumpy equipment businesses (unless you luckily catch an extra lump),” Jeffrey Sprague, co-founder of Vertical Research Partners, wrote in a note to clients this week.

The sale of NBC generated 4 cents a share, tempered by 3 cents in restructuring, acquisition and disposition costs, GE said.

The company doesn’t provide profit or sales forecasts, instead giving investors a “framework” on which to compile their own. Analysts estimated first-quarter sales of $34.3 billion, on average, according to a Bloomberg survey.

This is the first quarter the company has broken out pension costs or benefits in its income statement on a per-share basis. Including a pension cost of $163 million, net income attributable to common shareholders was $3.43 billion, or 31 cents a share.

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GE’s Tax-Bill Imbroglio Just Won’t Go Away

April 13, 2011 by · Leave a Comment 

It seems the imbroglio over General Electric Co.’s 2010 tax bill just won’t go away.

The multinational conglomerate said today (April 13) that a press release announcing that it would give $3.2 billion back to the federal government was a “hoax,” Market Watch reported.

The story said GE would return the money to federal coffers in the wake of a New York Times story that said the company received that much in “tax benefits” for 2010, interpreted by many to mean it had gotten a refund. The faux announcement of the return of those funds to the government had been picked up by the Associated Press, which retracted the piece shortly after GE dubbed it a fake.

Stock futures grapple with mixed data as consumer-spending figures for March are positive, while mortgage applications decline. Bellwether J.P. Morgan Chase’s earnings top estimates.

“One, we didn’t get a refund, and, two, (the press release) was a hoax,” GE spokesman Andrew Williams said.

Representatives of the Associated Press could not be reached for immediate comment. But the news service issued a report to affiliates saying it had received a fake press release via email that included a GE logo and a link to a website that looks like the company’s.

“The AP did not follow its own standards in this case for verifying the authenticity of a news release,” AP business editor Hal Ritter was quoted as saying.

“It’s not really in our interest to fool the media. It’s just the means to an end.’

A group calling itself “U.S. Uncut” claimed responsibility for the hoax, saying it had worked in conjunction with the “Yes Men,” a prankster duo purporting to target “leaders and big corporations who put profits ahead of everything else.” U.S. Uncut calls itself a “grassroots movement taking direct action against corporate tax cheats.”

Mike Bonanno, co-founder of Yes Men, said the groups have issued the fake press releases in order to get the media attention they otherwise would not receive.

“We tell small lies, momentary lies that get a lot of media attention,” Bonanno said. “If GE sends a press release, people listen. If we send a press release, they won’t.”

“It’s not really in our interest to fool the media. It’s just the means to an end,” Bonanno went on to say. “This is a last resort. We wish there was another way of doing it.”

On March 25, the Times published a story that indicated GE had reported worldwide profits of $14.2 billion, with $5.1 billion coming from U.S. operations. The story also said GE paid no U.S. taxes and claimed a “tax benefit” of $3.2 billion, which was interpreted as a refund. It goes on to describe aggressive accounting operations designed to keep GE’s tax bill low.

That story created a furor, bringing GE’s accounting practices under fire. But the piece has come under question from the company itself, as well as from other news outlets. The Washington Post later reported that GE will, in fact, owe 2010 federal taxes.

And the company itself issued this statement Wednesday: “We will file our 2010 tax returns by September. We expect to have a small federal income tax liability. In 2010, GE paid significant federal income taxes for prior years. We also paid about $1 billion in 2010 in other state, local and federal taxes in the U.S.”

GE went to say: “The main reason why our tax rate was so low in 2010, was that we lost billions of dollars in GE Capital, our financial arm, as a result of the global financial crisis. Similarly, in 2009, GE Capital’s losses were so large that the total company lost money on its U.S. operations. GE’s tax rate will be much higher in 2011 as GE Capital recovers.”

GE Capital is a main financing resource for the RV industry.

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GE Sees Finance Arm Being Profitable in 2009

March 19, 2009 by · Leave a Comment 

General Electric Co. expects its GE Capital finance unit to be profitable in 2009, the U.S. conglomerate’s chief financial officer said on Thursday.

“We expected GE Capital to be profitable in the first quarter and we expect GE Capital to be profitable in 2009,” CFO Keith Sherin told investors in New York.

He said that the company had run extensive stress tests on GE Capital’s portfolio and found that even in its worst-case scenario GE would not see itself needing to raise capital.

GE Capital, which has businesses ranging from investing in commercial real estate to financing sales of heavy equipment made by the U.S. conglomerate, last year recorded profit of about $8.6 billion, about 33 percent of the GE total.

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