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General Electric Earnings: What to Expect

Stocks in this article: GE

When discussing the continued right-sizing of GE Capital during the Dec. 17 meeting, Immelt said that the unit's balance sheet "will be probably less than $425 billion of any net investments," with roughly $75 billion in assets continuing to run off. GE Capital had $425 billion in total assets as of Sept. 30.

"We've got a nice set of core assets which are big lending and leasing franchises, mid-market franchises where we think we've got a strong competitive advantage," Immelt said, while hinting of large asset sales down the line. "We've got a set of businesses in what we call value maximizing which are the European banks in retail finance which, we are just going to try to drive shareholder value and make good decisions around those assets as time goes on."

GE on Monday completed its acquisition of Metlife Bank's deposit business, as MetLife (MET) continued to work toward escape Federal Reserve regulation as a bank holding company. GE Capital picked up roughly $6.4 billion in deposits and an "established online platform" to gather deposits, allowing the company to rely less on wholesale funding.

Total Revenue

The consensus fourth-quarter revenue estimate for General Electric is $38.715 billion, increasing from $36.349 billion in the third quarter, and $37.973 billion, a year earlier.

Coe trails the consensus, estimating third-quarter revenue of $37.948 million, with year-over-year declines in the Power & Water, Transportation and the GE Capital segments (driven by "asset attrition"), partially offset by revenue increases in the Oil & Gas, Energy Management, Aviation, Healthcare and Home & Business Solutions segments.

Barclays analyst Scott Davis on Jan. 10 estimated that GE's fourth-quarter revenue will total $39.026 billion, with revenue growth across all segments, except for GE Capital, for which he expects a 3% decline.

Power & Water

Coe estimates that segment fourth-quarter revenue will decline by 5% year-over-year, to $7.134 billion, with a decline in gas turbine shipments to 31 from 33, a decline of more than 20% in "in Aeroderivative shipments (38) and lower balance of plant revenues. Coe also said that "in Wind, we expect 750 turbine shipments vs. 1,014 in 3Q12 and 688 in 4Q11, driving 10% Y/Y Wind revenue growth."

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