General Electric (NYSE:GE) offers insight on where revenue growth can be found today: power and renewable energy. The company managed to report a rise in Q3 profits today thanks largely to strength in this sector of its business. Unfortunately other sectors like oil and gas, and slow investment and spending in the economy overall, remained a drag on the bellwether's sales, prompting it to lower the revenue growth target for the year to zero-ish and report more share buybacks to manufacture profit growth. See, General Electric's profit up but revenue forecast trimmed amid sluggish economy:
Organic revenue, which excludes growth from acquisitions, rose 1 percent in the quarter, below GE's forecast of 2 percent to 4 percent for the full year.
Analysts had been looking for GE to report stronger revenue growth after a weak first half. But oil and gas revenue fell 25 percent in the quarter.
GE trimmed its full-year revenue forecast to flat to 2 percent growth.
Ironically, in continuing to buy back shares rather than pay down debt and expand long term R&D and investment plans, GE is perpetrating the self-defeating circle which is plaguing itself and other companies today. A fixation on financial engineering to keep shareholders placated in the short run, means less funds for long term investment and restructuring that will grow the productivity, innovation, and revenues of the future.
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