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GE Beats Estimates, Revenue Falls (Update 2)

Stocks in this article: GE CCV LUFK

For GE's Power & Water segment, first-quarter revenue totaled $4.825 billion, declining from $7.652 in the fourth quarter, and $6.551 in the first quarter of 2012. First-quarter profit for the segment was $719 million, declining from $1.747 billion the previous quarter, and $1.188 a year earlier.

GE's For Oil & Gas and Power & Water segments were separately broken out from Energy Infrastructure in December.

First-quarter Oil & Gas revenue totaled $3.399 billion, declining from $4.548 billion in the fourth quarter, but increasing from $3.406 in the first quarter of 2012 Profit for the Oil & Gas segment was $325 million during the first quarter, down from $649 million during the previous quarter and $340 million a year earlier.

Energy Management fourth-quarter revenue totaled $1.748 billion, declining from $1.934 billion in the fourth quarter, but increasing slightly from $1.722 billion in the first quarter of 2012. First-quarter profit for Energy Management was $15 million, declining from $64 million the previous quarter, and $21 million a year earlier.

Aviation segment revenue for the first quarter was $5.074 billion, compared to $5.467 billion the previous quarter, and $4.891 billion a year earlier. First-quarter segment profit was $936 million, compared to $1.039 billion in the fourth quarter, and $862 million in the first quarter of 2012.

First-quarter Healthcare revenue totaled $4.289 billion, declining from $5.183 billion the previous quarter, and $4.300 billion a year earlier. Segment profit was $595 million in the first quarter, compared to $1.021 billion in the fourth quarter, and $585 million in the first quarter of 2012.

GE Capital

GE Capital's first-quarter revenue totaled $11.535 billion, declining from $11.770 billion the previous quarter, but increasing from $11.442 a year earlier. First-quarter profit for the finance arm was $1.927 billion, increasing from $1.808 billion in the fourth quarter, and $1.792 billion in the first quarter of 2012.

Following the $447 million dividend payment to the parent company, GE Capital's Tier 1 common equity ratio was 11.1% as of March 31, increasing from 10.2% at the end of 2012. GE Capital paid dividends totaling $6.4 billion to the parent company during 2012.

Investors were less than thrilled with the company's results, sending GE's shares down over 4% to close at $21.75.

JPMorgan Chase analyst C. Stephen Tusa in a note to clients called the first quarter results "an across the board operating miss," because the results included about $1.5 billion in gains from the NBCUniversal sale.

"Industrial segment revenues of -6% y/y were 400bps below our estimates," Tusa wrote, adding that industrial margins were "weak, even in the context of revenues, down 70bps y/y, nearly 100bps below our estimates."

When discussing prospects for GE's stock, Tusa wrote "We see little that is redeeming about this quarter. Yes, orders were good, and yes, the margin guidance and framework were reaffirmed, but at some point all of this needs to fall to the bottom line on earnings day, and while we were not expecting much this quarter, this was weaker than even our low scenario."

Tusa rates General Electric "Overweight," with a $24 price target.

BernsteinResearch analyst Steven Winoker said in a note that "all segments except Transportation missed our revenue and profit estimates," but on a more positive note said "Industrial growth markets revenues were up double digit in five of nine growth markets, including China."

Delving further into improved order volume, "infrastructure orders were up 3% (and up 6% ex-FX and Wind) at $23.8B, compared to up 2% in 4Q12 and down 5% in 3Q12," Winoker wrote.

"Infrastructure order pricing improved 60bp for the quarter, and the book-to-bill ratio was 1.3 in the quarter," Winoker wrote, adding that "Equipment and service orders in growth markets were up 17% in the quarter."

Winoker rates General Electric "market perform."

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