General Electric (GE) Tops Earning Expectations, But Disappoints on Sales

General Electric (NYSE:GE) declared fourth quarter results that beat earnings expectations but disappointed on sales. Revenues were down 8 per cent to $38 billion from $41.2 billion a year ago, against analysts’ expectations of $40 billion. But earnings from continuing operations were $3.93 billion, up marginally from $3.9 billion last year, translating to 39 cents per share as compared to analyst’s expectations of 38 cents.

“We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth market footprint and taking important steps to strengthen risk management,” CEO Jeffrey Immelt said in the statement. “We are restructuring our businesses in Europe to reflect market conditions.” Analysts were tepid in their response to the results, with many calling on the company to “work hard on driving their top line,” and especially to achieve a quarter “where they come out and cleanly beat analyst expectations.”

In regards to GE Capital, CFO Keith Sherin announced that it will be consolidated with GE Capital Services Inc. to simplify reporting.

In individual divisions, results were …

fairly mixed. Energy Infrastructure earned profits that were flat at $2.2 billion compared to last year, though sales rose 19 percent to $13 billion. Order backlog was a record $200 billion, with total infrastructure orders up 15 percent to $28.6 billion. Home and Business Solutions were lackluster with revenue and earnings falling 4 percent and 41 percent respectively.  Europe also had a negative effect on earnings within the health care division, with profits declining 5 percent to $953 million.

Transportation, however, was a definite bright spot with profit tripling to $226 million, a sales climb of 43 percent. In the Jet Engines division, profits rose 4 percent to $850 million; the record order inflow was due to new models being introduced by both Boeing and Airbus.

The management is placing priority on using cash to pay dividends, implement stock buybacks and downsizing acquisitions. “Really, we don’t need acquisitions; I wouldn’t look for us to do a big acquisition,” Immelt said. “We have got a pretty full pipeline of new products, and so I think the emphasis on dividend, reducing the float over time, those take a very high priority.”