Another Take on GE (GE)

General Electric (NYSE:GE) reported earnings and guidance, all of which looked in-line with expectations.  The conglomerate posted $0.50 EPS & $42.5 Billion in revenues, versus $0.50 & $42.42 Billion estimates. It also sees an EPS range next quarter of $0.67 to $0.69 versus $0.68 estimates and sees fiscal 2007 EPS in a range of $2.19 to $2.22 versus a $2.21 estimate.  It previously offered $2.18 to $2.23 for Fiscal 2007 before it’s "pretty good economy" presentation.

My partner broke out the numbers and saw that operating income lagged revenues growth.  He isn’t all that impressed.  Personally, GE’s earnings are almost always a mixed bag.  There are so many items in each quarter and always some moving parts that are viewed individually as good or bad.  This just depends if you see it half full or half empty.  My take is that with everything in-line and the reaction almost always being muted, this quarter was fine.  The company repurchased $6.3 Billion in stock for the quarter and will repurchase $5.7 Billion of stock in the fourth quarter.  Ths one boils down to interpretation and final opinions.  To me this looks fine, but there probably aren’t going to be any vigilant analyst calls either way.  This has so many moving parts that it just boils down to opinion.

Other issues ahead of earnings:

• The company is rapidly growing by acquisitions into the oil and gas markets.
• We have noted how recent strength was essentially 5-year highs in the stock.
• Recent financial changes were essentially immaterial.
• The outlook ahead will be without the plastics unit after the sale closed.

Jon C. Ogg
October 12, 2007