Earnings Preview: General Electric

General Electric (GE) is expected to report Q3 earnings before market open Friday, Oct. 10, with a conference call scheduled for 8:30 am ET.

Guidance

Analysts are looking for EPS of 45c on revenue of $47.71B. There is a tight consensus range of 44c to 45c for EPS, and $45.5B to $48.9B for revenue, according to First Call. The company gave guidance when it reported its Q2 results in July expecting Q3 EPS 50c to 54c vs. consensus of 54c, and FY08 EPS $2.20 to $2.30 vs. consensus of $2.22. However, on September 25, due to the "unprecedented weakness" in the financial service markets the company lowered is Q3 and FY08 EPS guidance. General Electric now expects Q3 EPS of 43c to 48c, and FY08 EPS of $1.95 to $2.10.

Analyst Views

The company also suspended its buyback plan, and said it will reduce commercial paper to 10% to 15% of total debt. General Electric made news recently when on October 1, the company announced plans to offer at least $12B of common stock to the public. In addition, the company announced that it has reached agreement to sell $3B of perpetual preferred stock in a private offering to Berkshire Hathaway (BRK.A).

On October 3, Citigroup lowered its FY08 estimate for the company to $1.96 from $2.00, and its target to $24 from $25. Citigroup maintained its Hold rating on the company's shares as the firm still sees risk to earnings.

Comments

[bobbobwhite:]

GE is poised to follow GM into obscurity. Old school companies just won't make it in the new economy. GE stock price is now lower than it was 10 years ago, and GM is where it was 50 years ago! Seemingly can't get much worse, but just wait a while.

2008 Oct 09 12:17 PM

[clh1679:]

Hey bobbo, great post there. However GE isn't an old school company, they do business in so many fields of the future it's not funny. Talk about developing nations they are there, talk about alternative fuels they are there, and probably one of the most important that hasn't been realized yet..................w... and water purification, that's right GE. If there is a more solid company (not to mention financial company) out there i'd love to see it. GM may be on the outs, but GE will be here long after you and I.

2008 Oct 09 12:34 PM

[triznix:]

I'm skeptical of GE as well. They are too big and are in too many different businesses. Forget about GE as a financial company.... that is just an albatross around their neck. I foresee some major divestitures.

2008 Oct 09 12:57 PM

[kotika98:]

> I foresee some major divestitures.

no kidding! they have already spinned off their reinsurance business, their plastics business, some banking businesses in the past year or two. And here comes a guy who foresees it all !!

2008 Oct 09 01:13 PM

[triznix:]

Well, kotika98, what do you foresee? Easy to criticize when you have nothing to offer.

2008 Oct 09 01:21 PM

[desicon:]

I am bullish on GE for the long term. But Immelt has failed to lead and he needs to go. He lead GE into the current turmoil instead preparing the company to be in a situation to take advantage of current market. The company portfolio needs to be balanced so that failure in one industry do not bring the value so much.

2008 Oct 09 01:26 PM

[J111Cool:]

GE is too big, too slow, too leveraged and too anti-customer to make it in the 21st century.

2008 Oct 09 01:36 PM

[CaptD:]

GE is under attack from the GLOBAL shorts (Oil $) and as a MAJOR US Defense contractor it is just one of the most visible companies in what I am now calling the (FIRST) ECOMONIC WORLD WAR or EWW 1. Get ready to discover many straGEtic US companies that are getting ripe for foreign takeover UNLESS SHORT TRADING IS HALTED ASAP BY THE SEC, LIKE YESTERDAY. Imagine if Boeing was owned by Iran or China or Russia!

2008 Oct 09 03:19 PM

[triznix:]

Maybe the SEC should ban any form of selling??

2008 Oct 09 04:39 PM

[get-it-righ...:]

Help me, OK? I'm wanting to buy GE now but I have been totally burned by poor choices for 5-plus years. I've seen so many sure-fire solid companies crash that I'm scared to buy anything. At least GE has a dividend, but for how long? The co does seem very diversified, and I generally agree they are on the cutting edge of many technologies, but that post about GM/GE has me spooked. Is GE simply too stodgy and slow to survive in an economy that changes overnight? Sensible advice would be appreciated since I'm almost broke. Thnaks.

2008 Oct 09 05:19 PM

[jm445:]

Jeff Immelt is a jerk. I watched his interview on 9/25/08 He emphasized, GE is solid, and well capitalized. Only leveraged at
6 or 7 to 1. GE Capital has returns on capital in the high teens.
I invested more of my IRA in GE based largely, on the statements made by the CEO. So what does Mr. Honesty do in early October? Issue more stock to raise needed capital. Diluting the value of my stock.
I will not need this money for 5 years, and with dividends will make money. I would expect a more honest representation, of the state of the company, from a company as large as GE.

2008 Oct 09 06:37 PM

[longandshort:]

Equating GE with GM?...man, no wonder we are in this mess...dumb people running around making dumb comments. GM lost the battle in the seventies, during the first oil crisis, GE has always made profits. Yes, they borrow to make profits..please name me companies that do not leverage to do business. If GE goes down, then about 95% of all businesses go down...maybe MSFT, GOOGLE with stronger cash holdings will last...but who will they do business with? Our economy is based on lending, borrowing and returns...its a cycle. ..why can we do this??...because we have enough FOOD to go around. If Bobbo plans to make more dumb comments, just became a farmer as leave us alone!

2008 Oct 09 10:38 PM

[TsarPyotr:]

I think GE's greatest strength and weaknesses is in their higher levels of management. I have worked for them both as an employee and consultant. The businesses are great on accountability, metrics, efficiency, and other areas. More than any company I've consulted for, though, they have some of the biggest a__holes I've ever worked with...ever met...in my life. The talk a good talk about integrity, respect and so forth in the annual report and such. Working on the inside is a mixed bag. I've moved on. I should have fired them as a client many moons ago. It's these "soft issues" that trouble me more than ratios, industries, and other things. Thank God I didn't buy a bunch of stock last fall. Down what $15+???

2008 Oct 09 11:26 PM

[workman:]

TsarPyotr - Agree with you assessment, I have worked for many large companies over the years including GE for 7 years. From an accounting stand point they seem to be efficient however inside they were anything but... for this reason I do not, and have have not been a holder of GE stock.

2008 Oct 10 12:32 AM

[johnthebear:]

Any idea how mark-market will affect commercial real estate loans and property held by GE?

Can we expect an honest report?

2008 Oct 10 01:03 AM

[formerhawk:]

get it right someday-I share your pain! I quit buying falling knives and plan to sit it out until I see an uptick then proceed with caution. Only reason I still own GE is the vast amount of stuff they are in including nuclear reactors and wind turbines. You can't compare them to GM who have had union problems for years-those union guys just don't think that their entitlement to health insurance and % more per hour every year will bust the company, but it probably will. I'm going to buy cash cows that produce products that are important worldwide.

2008 Oct 10 08:22 AM