GE (GE) Waves Goodbye To A Strong 2010 Performance

John Rice, chief executive of GE’s technology infrastructure division, told Reuters that he expects results at his business to be weak in 2010. “We’re not expecting a significant growth rate next year,” he said.

A quick look at GE’s third quarter results shows how damaging trouble in the technology infrastructure business could be.

GE’s revenue during Q3 was $37.8 billion. Technology infrastructure sales were $10.2 billion of that. GE’s operating income for the period was $4.4 billion. Technology infrastructure was the single biggest contributor among the GE divisions at $1.7 billion.

It is nearly impossible for GE to do well in 2010 without a recovery in a division that brings in such a large part of the company’s profits. The firm’s large capital finance unit is likely to continue to suffer in the wake of the credit crisis. GE’s consumer and industrial business have extremely low margins.

Rice has sent the market an important message. Next year is not the year that GE starts to post sharply improved results again.

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Douglas A. McIntyre