Falling GE profit meets estimates

GE is proposing a spinoff of its lighting business.

STAFF/WIRE REPORT

HARTFORD, Conn. — General Electric Co. reverted to form with no big surprises in its latest earnings report, and investors shocked by an unexpected profit shortfall three months ago showed their appreciation.

Even though earnings were lower, investors bid GE shares almost 2 percent higher.

The conglomerate whose interests range from making loans, TV shows and light bulbs to building industrial machinery reported a 6 percent decline in its second-quarter earnings but still matched analyst’s expectations.

GE’s share price rose 2 cents to $27.66 in trading Friday. They held their ground even as the Dow Jones industrials briefly slid below 11,000 for the first time in two years before a midafternoon turnaround.

“Overall, I think people are getting to be less fearful about the perceived risks vs. the actual risks of GE’s portfolio or how they run the business,” said analyst Nicholas Heymann of Sterne Agee. “At the margin things are better than people expected or worried would not be performing well. I think people are having a bit of relief.”

That was a big change from April 11 when the normally reliable GE shocked investors with a 6 percent decline in first-quarter earnings without preparing them for it. Its shares dropped 10 percent that day and led the overall market lower. GE blamed disruptions in its financial business late in the first quarter for its inability to advise Wall Street in advance about the deterioration in its earnings.

Fairfield-based GE earned $5.07 billion, or 51 cents per share, compared with a year-earlier profit of $5.38 billion, or 52 cents per share.

Revenue rose to $46.89 billion from $42.38 billion a year earlier.

Also Friday, GE announced it agreed to sell its Japanese consumer finance unit, which includes the Lake personal loan business, wholly owned credit cards and mortgages under GE Consumer Finance Co Ltd. and its subsidiaries, to Shinsei Bank, a midsize Japanese bank. The sale is expected to close in the next quarter.

On Thursday, GE announced that it wants to spin off its iconic lighting and appliance businesses.

The consumer and industrial businesses have 50,000 of GE’s 300,000 employees, sales of $13.3 billion and a profit of slightly more than $1 billion last year. GE Lighting invented the world’s first incandescent light bulb in 1879.

In the Mahoning Valley, GE has 430 employees at several area lighting plants. It has cut about 170 jobs at those plants this year because of declining sales.

GE announced in May that it planned to sell or spin off its appliance business, but now says it is looking to spin off the entire unit, which includes household appliances such as dishwashers and clothes dryers as well as lighting, motors and electrical distribution.

GE, an industrial, financial services and media conglomerate, said it continues to explore all options for the consumer and industrial operations, but believes it makes the most sense to spin off the entire unit to existing shareholders, keeping its leadership teams and employees intact. The company hopes to complete the move next year.