Moody's Corporation, General Electric Company Q2 2017 Earnings

Herbert Rhodes
July 22, 2017

Veteran chief executive Jeff Immelt, who is soon to step down after almost two decades at the helm, claimed the behemoth was on course to "meet or exceed" its $1bn cost-cutting target for the year, having already reduced structural costs by $670m year-to-date.

Jeffrey Bornstein, GE's chief financial officer, defended the timeline in an interview and said the company would have to "play through" any uncertainty created by a review that includes "testing everything we believe".

GE has been under pressure to cut expenses after missing profit goals but Friday's results are a sign that the company is headed toward a successful turnaround. The company is also conducting a review of its portfolio under its new CEO, Darius Adamczyk, which it expects to complete in late September or early October.

The oil and gas division of the company, however, posted revenue of $3.1 billion, a 3 percent decline from the same time previous year.

CFRA analyst Jim Corridore throws in the towel, downgrading shares to Hold from Buy, cutting his price target to $27 from $36 as well as his 2018 EPS estimate to $1.80 from a previous forecast of $1.85. Also, GE added that their profit and cash flow for entire year will be at the low end of its forecasts. Third Point LLC has called on Honeywell to explore selling or splitting off its aerospace business. Cash flow from operations totaled $3.6-billion, up from $400-million in the first quarter. We've reduced our Industrial structural costs year to date by $670 million and we are on track to meet or exceed our $1 billion cost reduction target for the year.

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The company said Flannery will provide an update on GE's 2018 possible predictions later in the year.

Net income was $1.2bn, down 57% from the year-ago period.

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

General Electric said Friday it recorded a 12 percent decline in overall revenues, with its oil and gas division taking a toll on the company's financials.

Imani Moise contributed to this article.

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