General Electric Restates Previous Years Earnings

General Electric continues to address their troubling future. $GE responded aggressively after it’s worse than expected 2017 earnings  slashing its dividend, board and selling off divisions. This week GE will restate 2016 and 2017 Earnings.

General Electric continues to address their troubling future. $GE responded aggressively after it’s worse than expected 2017 earnings  slashing its dividend, board and selling off divisions. This week GE will restate 2016 and 2017 Earnings.

GE CEO FlanneryNew GE CEO Flannery Putting his own stamp on the company

Update: GE books $4.2 billion charge, restates earnings as expected and reduce EPS over the last two years by $0.30

General Electric will restate Earnings for 2016 and 2017 by next Friday. The update follows its January 1 adoption of a new and required accounting standard, which affects how public companies recognize revenue from customer contracts. $GE has previously estimated 2016 EPS would be lower by 13 cents and 2017 EPS would be lower by 16 cents after adopting the new standard. The restatement follows two a proxy battle that recommended GE shareholders reject longtime auditor KPMG on independence and performance.

The earnings restatement was due by the ides of March however GE said it was taking longer than expected to determine the final number, not a positive sign. 

The company said the new accounting standard won’t affect 2018 EPS guidance of $1-$1.0

$GE reports Q1 2018 earnings before the market on April 20. 

General Electric shares lost over 3% keeping $GE as the Dow’s worst performer of the year to date, being down 25.2% so far in 2018. GE earlier last week announced it will sell part of its health care IT business to Veritas Capital for $1.05 billion. GE’s health care business had sales of about $19 billion last year, and the portion sold includes only the health care staffing and payroll services software.

Investor Day Presentation & Earnings Highlights From Q317 and Q417 – What Has Improved?

  • “This is the opportunity really of a lifetime to reinvent an iconic company,” Flannery
  • Renewed focus on healthcare, aviation and energy
  • “I was forced to confront a lot of the sort of deeper questions about the company,” Flannery 
  • Revised adjusted earnings for the year ahead between $1 and $1.07 a share and free cash flow still at significantly reduced levels of $6 billion and $7 billion, which it pledged to improve.
  • $GE looking to exit more than $20 billion of assets as it looks to sharpen
  • Slashed its dividend in half
  • $GE set a $3 billion share buyback priority
  • $GE will borrow $6 billion to take advantage of the current rate environment to shore up its pension plan shortfalls
  • The board of directors will be reduced from 18 to 12, with three new members slated “with relevant industry experience.”
  • Directors will have 15-year term limits.
  • Employee bonuses also will be restructured, with elimination of the three-year cash long-term performance awards and a switch to a program that conforms to “market norms.”
  • The dividend allocation will be $4.2 billion for 2018, pushing it from above 100 percent of free cash flow to 60 percent to 70 percent, and the dividend yield from 4.7 percent to 2.3 percent. 

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GE closed at $13.06 on Friday, down 2.8% for the day and has a 52-week range of $12.73 to $30.54.

Source: GE, AlphaStreet, TradersCommunity

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