Shares of General Electric slipped on Friday after the company posted their third quarter earnings report that largely missed on most analyst estimates. Aside from a weak earnings report, the company also gave a weak outlook for their plans and earnings in the coming quarter.
The manufacturing company whose shares declined by more than 5% during the pre-market trading and was down by as much as 8% during the regular trading session posted earnings of $0.29 per share for the third quarter representing a decline of 9% from the same quarter last year. This is lower than most analyst estimates of $0.49 EPS.
Although General Electric’s revenue has jumped by 14% to $33.47 billion beating most analyst estimates of $32.56 billion, its forecast for their full-year earnings of $1.05 to $1.10 per share was below their previous outlook of their earnings coming at a range of $1.60 to $1.70 per share.
The company’s earnings report for the third quarter was mostly affected by GE’s power business whose profits slipped by 51% to $611 million from having previously stood at $1.3 billion during the same period last year. GE’s earnings per share also was down due to the company cutting out restructuring charges.
General Electric’s oil and gas business sector profits also declined from last year’s third quarter profits of $353 million to a loss of $36 million this quarter. General Electric chief executive John Flannery who just filled in the position just a few months ago in August commented that the company is focused on redefining their culture which includes running their business in a better way and as well as cutting down their complexity.
Flannery also added that he is looking forward to a meeting with GE investors this coming November which will give them an update regarding their progress with the business. Investors are expected to focus on the company’s core business which is the industrial sector. Earnings from the business missed most expectations this quarter due to the decline in their division making and servicing equipment for the power industry.
According to Flannery who have noted that the third quarter was a challenging one, the company believes that a new leadership team being placed in their power division, as well as specific cost actions which the company will be taking, is expected to bring General Electric to a better position starting next year and the years to follow. General Electric is expected to cut around $2 billion more in costs by next year which is twice as much as their initial target. GE is also set to sell around $20 billion worth of assets in the next two years.
GE shares which slid by more than 3% during the early trading was one of the biggest losers under the Dow Jones Industrial index.
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