January 20, 2012 / 12:37 PM / 7 years ago

Instant View: GE Q4 revenue misses expectations, shares fall

(Reuters) - General Electric Co’s (GE.N) fourth quarter revenue fell more sharply than expected, hurt by weakness in Europe and unfavorable foreign exchange rates, sending its shares down about 3 percent in premarket trading.

The largest U.S. conglomerate said on Friday that net income from continuing operations rose 0.6 percent to $3.93 billion, or 37 cents per share, compared with $3.90 billion, or 36 cents per share, a year ago.

Profit excluding one-time items was 39 cents a share, a cent above the average analyst estimate according to Thomson Reuters I/B/E/S. Total revenue fell 8 percent to $38.0 billion, below the $40.0 billion analysts had expected.


“Revenue was a little light, and that was somewhat surprising. In December GE indicated that it was managing Europe well, now that’s what is pointed to for the light revenue. I think that’s kind of a weak excuse. I was hoping the reason for the light revenue was because of the capital business.

“So that is a little surprising, but it gives us a chance to buy the stock a little lower, which makes a lot of sense. I think the stock can trade at $21-22 later this year, so its still a good total return.”


“We’re concerned about the revenue miss, that’s really what we’re focused on this earnings season. We’re not so concerned about being a penny above or below expectations, because that can be handled with accounting gimmicks.”

“It raises some red flags.”

“The slowing revenue growth, what appears to be somewhat stalling margins, although you can argue that it’s somewhat normal at this part of the cycle, you still need to be concerned about it.”


“The revenue is probably the most concerning thing. The revenue is extremely explainable with them pointing out appliances in Europe. While that is explainable, probably whenever the analysts came up with their estimates they too had the assumption that because housing hasn’t been strong for years, neither would appliances be.

“I really want to hear the call to see what the cause for the pretty big shortfall is. We are very glad to see they continue to capture the margins. I have to disclose we are a holder of GE and we think it is doing pretty well overall but they are a bellwether and we are really interested to see what they see, especially in their industrial area, how the orders are.”

Reporting by Scott Malone, Ryan Vlastelica and Charles Mikolajczak, Compiled by Tiffany Wu

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