GE Under SEC Investigation, Misses Earnings

General Electric reported Q4 earnings that missed expectations also saying it is restating previous results. During their conference call $GE announced they were under SEC investigation. 

General Electric reported Q4 earnings that missed expectations also saying it is restating previous results. During their conference call $GE announced they were under SEC investigation. Initially the stock surged as the oil and gas division beat consensus. Welcome to 2018 bull market euphoria.

bakerhughes ge

Finally a bright spot in GE Land – Oil and Gas

Reaction: General Electric Company NYSE: $GE

Morning $16.78 – 0.11 -0.62%

(After Spiking to $17.36)

Earnings:

Adjusted net loss per share of $1.23 on revenues of $31.4 billion v same period a year ago EPS of $0.39 on revenues of $33.09 billion. Missing consensus estimates were EPS $0.29 on revenues of $34.06 billion.

For the full year, GE reported an adjusted net loss of $0.45 per share on revenues of $122.09 billion, compared with EPS of $1.49 and revenues of $123.69 billion. Consensus estimates were for EPS of $1.06 and revenues of $124.92 billion.

Preview of Bite Image

Highlights

GE booked a non-GAAP industrial operating and verticals loss of $10.65 billion, compared with a $4.08 billion profit in the same period a year ago.

For the full year, the non-GAAP loss totaled $3.87 billion, compared with a profit of $13.61 billion in 2016.

Non-GAAP industrial operating and verticals posted a net loss of $1.23 per share in the fourth quarter, including 

  • $0.15 per share related to items held for sale,
  • $0.23 per share in impairment charges,
  • $0.71 per share related to the run-off of GE Capital’s insurance portfolio
  • $0.40 per share related to changes in U.S. tax law.

Excluding these charges, industrial operating and verticals earnings fell 43%, from $4.08 billion in the fourth quarter of 2016 to $2.33 billion, and adjusted EPS fell 41%, from $0.46 to $0.27.

In the fourth quarter, EPS was at the low-end of guidance, excluding insurance-related items, U.S. tax reform, and industrial portfolio actions. Cash performance was above expectations and our visibility and execution on cash is improving. Aviation and Healthcare had strong performances in the quarter. Power was down significantly and we expect market challenges to continue. Our results this quarter demonstrate some of the early progress we are seeing from our key initiatives. The team is focused on operational execution, capital allocation and deep cost reduction to position us for continued improvement in 2018. – CEO John Flannery

SEC Investigation

The U.S. Securities and Exchange Commission began an investigation in late November of the long-term service agreements that govern GE’s maintenance of power plants, jet engines and other industrial equipment it sells, GE said.

The SEC recently expanded the inquiry to include a $6.2 billion charge and $15 billion in provisions for insurance policies that GE announced last week, GE said.

GE did not provide further details, but said it is cooperating with the investigation.

“It’s very early days, there’s nothing here I‘m overly concerned about.” Chief Financial Officer Jamie Miller said on a conference call with analysts.

Live From The Pit

Leave a Reply

Your email address will not be published.