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Published: Sat, July 22, 2017
Economy | By Melissa Porter

GE profits off in second quarter

GE profits off in second quarter

The conglomerate reported an expectedly hard report to analyze.

This year's earnings are likely to be near the bottom of the company's forecast of $1.60 to $1.70 a share, Chief Financial Officer Jeff Bornstein said on the call.

Both sides agreed unanimously on the arrangement in October, with the oil and gas unit of GE taking a 62.5 percent stake in Baker Hughes for an entity with combined revenue of $32 billion.

GE has been under intense pressure to cut expenses and pledged in March to cut $1 billion in annual industrial expenses for each of the next two years, which is twice the level of cuts originally laid out. Revenue fell 12% to $29.56 billion, but was above the FactSet consensus of $29.14 billion.

US stocks closed lower Friday, with the Dow industrials finishing lower for the week, as General Electric Co.'s (GE) outlook cast a cloud over earnings season, which is just getting started.

The company reported a 53 percent drop in profit to $1.37 billion, or 13 cents per share.

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GE attributed the decline in revenue to weakness in its energy connections business, which offset the strong performance in the renewable energy and power segments.

It beat analyst expectations on adjusted profit, but cash flow was weak and GE said full-year profit and cash flow will be at the low end of its forecasts.

Cash flow in GE's industrial segment was a positive $1.5 billion after a shocking first-quarter shortfall of $1.6 billion. Of that total $242.6 billion is services backlog and $84.2 billion is equipment.

GE cut $593 million in industrial costs in the second quarter and said it was on track to meet or beat its $1 billion savings goal by the end of the year.

Last month, GE said Immelt would step down effective August 1, after 16 years as the CEO. For the quarter, the division yielded $2.5 billion in revenue, up 17 percent from the same period in 2016. The current EPS for the company has been recorded at $1.92 and the beta value recorded by the company stands at 1.32 points.

GE rose less than 1 percent to $26.89 in NY before regular trading. That is versus a 52-week range of $25.85 to $32.38. It closed at $26.69 on Thursday.

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