GE's latest earnings are a last-chance showing for its CEO

Closing Indexes Summary July 21

Closing Indexes Summary July 21

General Electric shares gyrated Friday after the company reported earnings that beat Wall Street's expectations but reported a 12 percent drop in revenue.

Share prices were down as much as 5 percent after GE's earnings statement.

GE has been under pressure to cut expenses after missing profit goals but Friday's results are a sign that the company is headed toward a successful turnaround.

Shares of the United States conglomerate fell more than 4% in morning trade after it said profits fell 57% to $1.2bn, as sales in its oil and gas, transportation and lighting divisions fell.

Still, the stock could be in "in a state of limbo" until the review is finished, Deane Dray, analyst at RBC Capital Markets, said in a note.

The company stated its full-year prediction for cash flow, profit, revenue and operating margin. "People's openness to rethinking things or thinking about things differently or challenging many things we've taken for granted is encouraged, and people get excited about that". The shares fell to their lowest level since October 2015.

Corporate Earnings Report July 21
Data courtesy of Trade-Alert

Despite re-examining its spending, GE said it won't consider reducing its dividend payout, which Mr. Bornstein called "the single most important capital allocation item that we have". He also is "taking a hard look at our corporate spending" to ensure it contributes to earnings, and on a listening tour of investors.

"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", Chairman and CEO Jeff Immelt said in an earnings release.

GE during the second quarter reached an agreement with the U.S. Justice Department that closed the merger with oilfield services company Baker Hughes.

The company reported cash flow from operations of $3.6 billion, a 67% decline from a year earlier. Second-quarter results compare to the consensus estimates for EPS of $0.25 on revenues of $29.02 billion.

Net profit slumped 59 per cent to $1.34-billion, or 15 cents a share, in the quarter ended June 30, from $3.30-billion, or 36 cents a share, a year earlier.

The company posted earnings per share of 28 cents, beating estimates of 25 cents.

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