GE Revenue Declines on Energy Weakness

NEW YORK (TheStreet) -- Shares of General Electric (GE) were down 4.5%, to $16.40, in morning trading Friday as investors reacted to a significant decline in revenue in the company's Energy Infrastructure unit.

During the company's third-quarter earnings conference call Chief Financial Officer Keith Sherin said the "wind market has really collapsed in the U.S." when discussing the unit's 14% year-over-year decline in revenue.

Another weak point for the energy division was that the oil & gas segment's third-quarter profit of $287 million was a 15% decline from the third quarter of 2009.

On the positive side, CEO Jeff Immelt expressed confidence that the company would have no problem in the higher capital requirements of the Basel III, saying "we feel pretty good that even by the end of this year we'll be in the ranges we need to be in."

GE's cash hoard grew to $78 billion during the third quarter. Immelt said the company would be looking to follow up on its $3 billion cash purchase of Dresser with additional energy deals "in the $1 billion to $3 billion range." He also said that "if we don't see good opportunities, we'll increase the dividend and do more buybacks."

In a conversation with TheStreet, Charlie Smith, the chief investment officer at Fort Pitt Capital Group in Pittsburgh, Penn., described GE's quarter as "very uneventful," adding that "obviously the big wart was the decline in Energy Infrastructure," as the wind turbine business suffered amid the decline in natural gas prices. But he saw a silver lining, adding that "this will help GE's thermal business as people switch to gas. "

Smith also said that credit loss provisioning was still quite high at GE Capital and that the discussion of a possible "liability tail" from the sale of the company's U.S. mortgage business in 2007 was of some concern. General Electric stock is among the investments held by the funds he manages.

Ron Weiner, CEO of RDM Financial Group in Westport, Conn. noted that GE Capital's profits grew "for the first time in eight quarters," but described the unit "a finance albatross around [GE's] neck." Weiner does not currently hold GE shares in the funds he manages, adding that he would focus "on other industrials more directed to the emerging markets," including Caterpillar (CAT), and international resource plays like Peabody Energy (BTU), both of which his firm holds .