General Electric Co. (GE) reported earnings and revenue that topped Wall Street’s expectations on Friday morning, but both numbers were down significantly from a year ago. GE stock, which has lagged the market over the past decade, traded lower by more than 4 percent in early trading.
GE reported earnings per share of 28 cents and revenue of $29.5 billion in the second quarter. Both numbers beat consensus analyst estimates of 25 cents and $29 billion, respectively. However, EPS was down 45 percent from a year ago, while revenue fell 12 percent on the quarter. The sale of its appliances division also weighed on cash flow from operations, which plummeted 67 percent from a year ago to $3.6 billion.
GE continues to focus on its cost-cutting initiatives, according to CEO Jeff Immelt.
“We’ve reduced our Industrial structural costs year-to-date by $670 million, and we are on track to meet or exceed our $1 billion cost reduction target for the year,” Immelt says.
Immelt will step down from his position Aug. 1 and will be replaced by GE Healthcare president John Flannery. GE stock has fallen more than 30 percent since Immelt took over as CEO in 2001, while the Standard and Poor’s 500 index more than doubled in that time.
Wall Street analysts see Immelt’s departure as an uncertain transitional period for GE.
“Usually when a new CEO comes in, especially after a long-standing previous CEO, they want to lower the bar because that’s where their starting point begins,” says Harbor Advisory chief investment officer and GE shareholder Jack DeGan.
Citigroup analyst Andrew Kaplowitz says GE’s quarter was “generally solid” but that it likely did little to placate concerned investors.
“We think 2Q results may not be enough to significantly alleviate negative investor sentiment,” Kaplowitz wrote on Friday.
GE reiterated…
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