|
GE nudges target higher
|
 |
May 9, 2001: 2:49 p.m. ET
Company says 2001 earnings will be well above $1.45 a share
|
NEW YORK (CNNfn) - General Electric Co. said Wednesday profits will come in at the high end of its previous targets this year, noting that the company's diverse businesses do well even in a weak economic environment.
The Fairfield, Conn.-based company, which makes aircraft engines and light bulbs and owns the NBC television network, said it still is on target to deliver record earnings this year, and now expects profits "solidly above" $1.45 a share, compared with its previous guidance of $1.40 to $1.50 a share.
Wall Street has been expecting profits of $1.47 a share on average for the year, according to First Call, which tracks analysts' forecasts.
"I don't know that many companies the size of GE whose earnings are up 16-17 percent right now," Bear Stearns Analysts John Inch said. "It's really because of cost-cutting actions that really positions this company to do very nicely for what could be 20 percent earnings growth in 2002."
GE Chairman-Elect Jeffrey Immelt, who announced the new guidance at an industry conference in Florida Wednesday, singled out the company's diversification as a main driver in its strong profits in a down economy.
"The strength of the GE model really shines during slower parts of the business cycle," Immelt said in a statement, adding the company's global spread of businesses, strength in service and moves to embrace technology "have reduced GE's sensitivity to business cycles."
Inch said Immelt's announcement was a way for him to put his mark on the company as its popular CEO John Welch prepares to retire at the end of 2001.
Inch also said that in addition to its diversity, which lowers its risk in any one business sector, the company's long-cycle businesses such as power, medical and aircraft engines, have helped offset other short-cycle businesses, or those whose products consumed quicker, such as appliances and lighting.
He also said GE's recent cost-cutting measures, including trimming some jobs, along with a move toward digitization, have given a boost to the bottom line.
The news comes as GE awaits European regulatory approval for its planned $42 billion acquisition of Honeywell International (HON: down $0.01 to $49.25, Research, Estimates). U.S. regulators approved the deal last week, but European regulators are scrutinizing it carefully.
On April 12, GE reported a 16 percent rise in first-quarter earnings, matching Wall Street forecasts on the strength of profits from ongoing operations. 
|
|
|
|
|
 |
|
