Economy

General Electric's bad Q3 Earnings Just the Tip of the Iceberg

USA industrial giant General Electric slumped in pre-market trade on Wall Street on Friday after it reported that its quarterly profits fell short of expectations.

Shares of GE were down 7 percent Friday morning prior to the opening bell of the New York Stock Exchange, trading at just under $22 a share.

"This was a very challenging quarter", said CEO John Flannery, after his first official quarter at the helm. Flannery said it should leave GE in a "better position in 2018 and beyond".

The US industrial conglomerate, newly led by chief executive John Flannery, reported net profit of $1.8 billion, down 9.7 percent from the year-ago period. The retrenchment will leave GE, which spent more than $5 billion on research and development previous year, with just two global research sites, located in Niskayuna, N.Y., and Bangalore, India. Excluding non-recurring items, adjusted earnings per share were $0.29.

Excluding items, industrial cash flows from operating activities was $1.74 billion in the third quarter ended September 30, down from $2.90 billion, a year earlier.

GE reported adjusted profit of 29 cents a share compared with the 49 cents a share analysts had expected, according to a consensus of estimates from Thomson Reuters I/B/E/S. Operating profit margin rose 1.5 points to 8.8%. Analysts were looking for revenues of $32.56 billion. Revenue from GE's power, oil & gas, aviation, healthcare and transportation business beat expectations, while renewable energy revenue fell short.

During the quarter, GE closed the $3.4 billion sale of its water and process technologies business to Suez and agreed to sell is industrial solutions business to ABB for $2.6 billion.

The Baker Hughes acquisition also accounted for the 14.4% increase in the company's consolidated revenues.



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