GE Reiterates Earnings Guidance

GE affirmed its Q3 and full-year earnings targets at an analyst presentation Tuesday, with CFO Keith Sherin describing the global industrial economy as "pretty good."The company is expecting Q3 EPS of $0.54-$0.56 on approximately $42 billion in revenue, in line with prior analyst forecasts of $0.55 EPS on about $42.7 billion in revenue. 2007 EPS is projected at $2.16-2.21; analysts had been expecting $2.21. The sale of the company's plastics unit to Saudi Basic Industries Corp. will result in a $1.7-1.9 billion gain (about $0.18 per share) in Q3. GE will take a $300-400 million hit as it shuts down WMC Mortgage Corp., its subprime mortgage unit. The company posted $682 million in losses from the unit in H1. "We made a decision to get out, and we're taking the hit," Sherin said. Total Q3 charges are forecast at up to $1.9 billion, including $900 million-$1 billion to write down the value of the company's Japanese personal-loan unit. Major equipment orders are up 40% in Q3 on strong demand for power generation, medical and aviation equipment. Services orders are up 9%. GE's AAA debt rating helped it weather the summer's market convulsions: the company sold $18 billion in long-term debt securities in August. "The flight to quality has been incredible," Sherin said. GE closed up 3.7% at $41.68.

Sources: GE analyst presentation (audio/visual), Bloomberg, MarketWatch, Reuters, 24/7 Wall Street, Wall Street Journal
Commentary: GE Plans To Shop Its WMC Subprime Mortgage Unit • GE Seeks Exit From Japanese Consumer Finance Industry • GE Sells Plastics Unit to Sabic for $11.6 Billion
Stocks/ETFs to watch: GE. Competitors: PHG, C, SI. ETFs: EXI, DHS, PRFN
Earnings call transcript: General Electric Q2 2007

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