GE’s earnings fell 18% this quarter. Their revenue dropped 8%. I bet Warren Buffett is thrilled with his $5 billion investment in this turkey. The article below shows how terrible all of their businesses are doing. Jeff Immelt is once again proving what a genius he is. Isn’t the country lucky to have him as the Obama jobs Czar? I tried to decipher the GE press release, but it is a hodgepodge of gibberish meant to mislead and confuse anyone who reads it. See for yourself.
I zeroed in on GE Capital and the GE balance sheet. Amazing that GE does not include a Cash Flow Statement in their release. I wonder why? Here are a couple observations from an accountant:
- GE Capital’ revenue declined by 9% in the quarter, but it’s income rose 58%. WOW!!!! How many companies do you know that could pull off such a feat? Aren’t accoutants awesome? All it takes is a journal entry and we can increase profits by billions. It seems GE chose to not mention how much of GE Capital’s income came from reducing their reserves for future losses on their credit card, commercial real estate, and mortgage loans. They happen to have $289 BILLION of these loans outstanding. We are entering a recession and GE reduces their provision for future losses. BRILLIANT!!!!
- It seems GE reported their earnings up 16% for the year. If you exclude their $3 billion reduction in loan loss provision, GE earnings actually declined by 7%. See how influential us accountants can be.
- The balance sheet often reveals truths not seen in the income statement. Even though they supposedly made $13 billion in 2011, their shareholder equity declined by $2.5 billion. They are still leveraged 4 to 1.
GE is still a disaster waiting to happen. When the recession hits its stride in 2012 GE will go down hard. Book it.
GE Comes Up Short On Healthcare And Aviation
GE (NYSE: GE) proved once again that it cannot fire on all of its cylinders as the performance of its aviation and healthcare businesses faltered.
GE missed analyst estimates which were $.38 for the fourth quarter on revenue of $40.05. It released it figures as it usually does–in a confused format which makes them hard to understand:
GE announced today fourth-quarter 2011 Operating Earnings of $4.1 billion, or $0.39 per share, up 6% and 11% respectively from the fourth-quarter of 2010. Revenues were $38.0 billion for the quarter and $147.3 billion for the year. Record Infrastructure orders of $28.6 billion in the fourth quarter enabled GE to end the year with a backlog of $200 billion, the largest in its history.
The backlog is not very important when some of the balance of the key divisions are performing poorly. Also lost at the top of the earnings release was that revenue for the entire company dropped sharply from $41.2 billion in the quarter last year to $38 billion in the most recent quarter
Aviation revenue was up 2% to $4.9 billion, and operating income rose 4% to $850 million. In a world in which Boeing and Airbus have recorded strong orders, the numbers seem out of place. Maybe GE aviation product sales will catch up later
Healthcare figures were worse. Revenue rose 1% to $5.4 billion. Operating income was down by 4% to $953 million.
Even the GE flagship division–energy infrastructure–only had partial good news. Revenue rose an impressive 19% to $13 billion, but segment operating income was flat at $2.2 billion
CEO Jeff Immelt said “We finish 2011 with momentum and are positioned for a strong 2012. Our Industrial businesses are positioned for growth. GE Capital is strong and profitable. We have substantial cash available to improve shareholder returns. The Company is positioned to perform for investors.”
What happened to last year’s performance? There did not seem to be any momentum at all.
Douglas A. McIntyre