GE ups dividend for fourth time in 18 months

GE ups dividend for fourth time in 18 months

Stock Market Predictions

(Global Markets) - General Electric Co (GE.N) said on Friday it is raising its quarterly dividend by 13 percent, marking the fourth time the largest U.S. conglomerate has increased the payout since July 2010 and sending its shares up 3.6 percent.

The series of increases -- totaling 70 percent -- were intended to signal that the world's largest maker of jet engines and electric turbines had recovered from the 2008-2009 financial crisis, when it slashed its payout to conserve cash.

But Chief Executive Jeff Immelt has cautioned investors that the Fairfield, Connecticut-based company aims to return to its historic practice of raising the dividend once per year, in line with earnings growth. GE aims to pay out 45 percent of earnings to shareholders through the dividend.

"Our balanced and disciplined capital allocation plan has enabled us to achieve important goals including increasing dividends, redeeming the preferred stock held by Berkshire Hathaway, redeploying our (NBC Universal) capital to high growth energy acquisitions and investing in organic growth platforms," Immelt said in a statement.

GE's board voted to raise the quarterly dividend by 2 cents per share, to a rate of 17 cents, payable on January 25. It remains below the 31 percent pre-financial-crisis rate.

GE shares were up 3.6 percent to $16.89 in midday trading on the New York Stock Exchange.

When the company reported third-quarter results, it told investors it expects to grow profit at a double-digit rate next year. While Immelt is likely to offer more detail on the company's expectations in a meeting with investors on Tuesday, GE no longer provides shareholders with specific per-share profit targets, a practice it abandoned during the financial crisis.

GE in October bought back the preferred stake it had sold to Warren Buffett's Berkshire Hathaway Inc (BRKa.N) for $3.3 billion plus unpaid dividends.

(Reporting by Scott Malone in Boston; Editing by Derek Caney, Dave Zimmerman)

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GE to open technology center in New Orleans

GE to open technology center in New Orleans

Stock Market Predictions

(Global Markets) - General Electric Co's (GE.N) financial services arm will open a new technology center in New Orleans, creating 300 jobs over three years, the largest U.S. conglomerate said on Friday.

The center, which will open in mid-2012, will focus on creating new software and processes for the GE Capital business, the company said.

GE chief executive Jeff Immelt said this week wage differences between the United States and other countries were narrowing and it saw an opportunity to bring jobs back to the United States. The company said it plans to hire some 5,000 military veterans over the next five years.

(Reporting By Nick Zieminski in New York; Editing by Gerald E. McCormick)

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GE holds dividend steady, analysts see December hike

GE holds dividend steady, analysts see December hike

Stock Market Predictions

(Global Markets) - General Electric Co (GE.N) said on Friday that its board voted to hold its quarterly dividend steady at 17 cents.

The largest U.S. conglomerate had raised its payout four times in 18 months, with the last hike coming in December and representing a cumulative 70 percent increase from the 10 cent per share level the company had slashed it to during the financial crisis.

The rapid pace of increases was intended as a signal that the company had regained its confidence after its GE Capital business had been hard hit by the downturn. But Chief Executive Jeff Immelt has said the Fairfield, Connecticut-based company eventually intends to return to its historical practice of raising its dividend once per year.

Analysts, on average, expect a 2-cent-per-share hike to 19 cents in the fourth quarter 2012, according to Thomson Global Markets I/B/E/S.

The company is also waiting for the Federal Reserve, which last year became GE Capital's regulator, to give it the go-ahead to resume paying a share of GE Capital's earnings back to the parent company in the form of a dividend. Analysts have said that approval could clear the way for a larger dividend increase.

GE shares currently have a dividend yield of 3.6 percent, the fifth-highest in the Dow Jones industrial average .DJI, which has a 2.6 percent average yield.

(Reporting By Scott Malone)

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Caterpillar profit misses

Caterpillar profit misses

Stock Market Predictions

NEW YORK (Global Markets) - Heavy machinery maker Caterpillar Inc disappointed Wall Street with a second-quarter earnings miss on Friday, hurt by higher costs, and its shares fell nearly 6 percent, dragging down the U.S. stock market.

The maker of equipment used in mining and construction also said economic growth in the United States and other developed economies was weaker than expected and reported signs of a slowdown in China.

Although Caterpillar raised its full-year sales and profit forecast, the midpoint of its new range was below analysts' average estimate. Shareholders also noted a more cautious tone in the company's economic commentary, closely watched by investors in economically sensitive manufacturing and transport stocks.

Caterpillar shares were down $6.65 to $104.95 in afternoon trading and most other industrial stocks were also lower, though off the day's worst levels.

Rising prices of commodities like steel and copper, as well as higher transportation and labor costs, hurt profit in a quarter with elevated expectations, said Andrew Meister, equity research analyst with Minneapolis-based Thrivent Financial, which holds almost 1 million Caterpillar shares.

"In a quarter where the price increases lag the increases in manufacturing costs, you have a miss like you have today," Meister said. "But what it says is, the long-term outlook for Cat's products appears robust."

Caterpillar's commentary was more subdued than in the past but its forecasts may eventually prove conservative, said Meister, who called Friday's stock sell-off an overreaction.

"I don't think there's anything wrong with Caterpillar," he said.

Caterpillar finance chief Ed Rapp said raw material inflation was roughly in line with what the company expected when it laid out its 2011 forecasts.

Longer-term, higher commodity prices are a "net positive" for the company, he said in an interview. They drive investment by producers, which in turn boosts demand for infrastructure.

3-CENT MISS

Net earnings rose 44 percent to $1.02 billion, or $1.52 per share, in the second quarter, from $707 million or $1.09 per share a year earlier.

Excluding acquisition costs, Caterpillar earned $1.72 per share, 3 cents short of analysts' average forecast, according to Thomson Global Markets I/B/E/S.

Sales rose 37 percent to a record $14.23 billion.

"The bottom line disappointed," said Oliver Pursche, Co-Portfolio Manager of the GMG Defensive Beta Fund that holds Caterpillar shares. "Caterpillar tends to be very sensitive to macro issues."

The company faced headwinds from China and Japan, he said, but did a good job lifting sales to a record and has been especially successful expanding in Latin America.

The company said the March earthquake in Japan reduced its operating profit by $60 million by boosting costs, but the negative impact from Japan is now past.

Caterpillar said it expects its recently-closed $7.6 billion acquisition of mining equipment maker Bucyrus to add $2 billion to its sales this year and to add to earnings after this year. It now expects 2011 profit of $6.75 to $7.25 per share, excluding Bucyrus, raising its range by 50 cents on either end. Analysts expect $7.08.

"The forward guidance is a little bit disappointing," said Eric Marshall, director of research for Hodges Capital Management, which recently sold its Caterpillar holdings.

"The dealer statistics were so strong throughout the quarter, it built in a lot of pretty high expectations," he said. "People expected a little bit more."

Asked about the company's initial 2012 estimate for earnings of $8 to $10 a per share, before acquisitions, CFO Rapp said, "We're still very comfortable with that range."

Analysts' 2012 estimates currently average $9.12 per share but vary widely, from $7.54 to $9.90.

SLOWER GROWTH

Caterpillar forecast slower global economic growth this year than in 2010, and said U.S. growth was being curtailed by "a lack of confidence in the business climate."

Like many U.S. multinationals, Caterpillar has been able to increase profits, despite a slow economic recovery in its domestic market, thanks to rapid expansion in other economies, including Brazil, Russia, India and China. Caterpillar derives more than a third of sales from such emerging markets.

China, however, has taken steps to cool its economy and tame inflation. Higher interest rates and other policy moves have raised concerns among investors that China's growth could slow abruptly.

"We've seen some softening of growth in China," Caterpillar Chief Executive Doug Oberhelman said in a statement, but he added that expectations remain positive. China is doing a good job of balancing growth and inflation, Oberhelman said. Overall, emerging markets remain robust.

Fellow industrials General Electric Co and Honeywell International Inc also reported quarterly results on Friday.

GE shares were little changed after its profit beat forecasts, helped by emerging market demand for equipment used in energy production. Honeywell fell 2.5 percent despite higher earnings and an improved full-year forecast.

(For a Global Markets Insider view on Caterpillar vs GE, see link.reuters.com/zur72s.)

Caterpillar's tumble, its steepest since May, was enough to keep the Dow Jones industrial average in negative territory, even as the S&P 500 index turned positive.

(Reporting by Nick Zieminski in New York and Scott Malone in Boston; Editing by Derek Caney, Matthew Lewis and John Wallace)

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GE revenue lower than expected

GE revenue lower than expected

Stock Market Predictions

(Global Markets) - General Electric Co's (GE.N) fourth-quarter revenue fell short of Wall Street expectations, with Europe's weakening economy and weak sales of appliances the main culprits.

But the largest conglomerate held to its forecast of double-digit profit growth this year, saying that it would expand in rapidly growing economies and cut costs in Europe, particularly at its health care arm.

Revenue fell 7.9 percent to $37.97 billion, down from $41.23 billion and below the $40.03 billion analysts had expected. Factoring out the effects of last year's sale of a majority stake in NBC Universal revenue would have been up 4 percent.

In addition to general European weakness, sales of appliances were off, with the home and business solutions division that sells them recording a 4 percent revenue drop.

Sales at GE's energy division, which makes products ranging from electric turbines to equipment used in oil production, were up 19 percent in the quarter, slightly below the company's expectations as some deliveries were shifted out of the fourth quarter into 2012, executives said.

"There are a few challenged markets, like Europe and appliances, but on balance we have a positive outlook," Immelt told investors on a conference call, where he also reiterated the Fairfield, Connecticut-based company's forecast for double-digit earnings growth this year.

The revenue miss concerned investors, overshadowing a penny-per-share earnings beat and sending GE shares down 0.1 percent to $19.13 on the New York Stock Exchange.

This miss is the latest blow for Immelt, who has seen GE shares generally lag the U.S. stock market during his decade as CEO. In the fall of 2007, GE shares briefly topped $40.50, where the stock had closed before Immelt's storied predecessor Jack Welch handed off the reins. Today the shares trade at less than half that price.

Over the past year, GE shares are up 4.5 percent, lagging the 6.8 percent rise of the Dow Jones industrial average .DJI but ahead of the 2.5 percent rise of the broader Standard & Poor's 500 index .SPX.

"We're concerned about the revenue miss," said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York. "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."

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For a graphic on GE: link.reuters.com/kun26s

For a graphic on industrial-sector earnings:

r.reuters.com/van26s

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MARGINS IMPROVE

The world's biggest maker of jet engines and electric turbines said 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.

Factoring out one-time items, profit came to 39 cents per share, above the 38 cents analysts had forecast, according to Thomson Global Markets I/B/E/S.

Profit margins at the company's industrial operations were better than expected, analysts noted, with the energy and aviation units showing improvement.

"We anticipated total industrial margin to be weaker overall," wrote BernsteinResearch analyst Steven Winoker, in a note to clients.

Immelt also noted the prices its energy arm is able to charge for its equipment, particularly wind turbines, are stabilizing, which should boost profit margins.

"We see energy pricing stabilizing as we move through 2012 and into 2013," Immelt said.

LESS DEPENDENT ON EUROPE

GE is less dependent on Europe than rivals Siemens AG (SIEGn.DE) and Philips Electronics NV (PHG.AS), which earlier this month warned that the Eurozone debt crisis would hurt their results this year.

GE noted that its industrial revenue in emerging markets was up 25 percent in the quarter, with strong growth in Brazil, Russia, China and India.

GE kicked off a wave of earnings reports from big U.S. manufacturers, with blue-chip peers United Technologies Corp (UTX.N), Caterpillar Inc (CAT.N) and 3M Co (MMM.N) all due to follow suit over the next week.

"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," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire.

(Reporting By Scott Malone in Boston, additional reporting by Ryan Vlastelica, Chuck Mikolajczak and Nick Zieminski in New York; Editing by Tim Dobbyn, Derek Caney, Phil Berlowitz)

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GE tops Wall Street estimates on overseas demand

GE tops Wall Street estimates on overseas demand

Stock Market Predictions

BOSTON (Global Markets) - General Electric Co notched a better-than-expected 21.6 percent rise in earnings, helped by strong demand for jet engines as well as equipment used in oil and natural gas production.

The largest U.S. conglomerate said on Friday its second-quarter results were helped by a rebound in sales of railroad locomotives, which offset weakening demand for wind turbines. With overall orders up 24 percent, pushing the company's backlog to $189 billion, Chief Executive Jeffrey Immelt said he was confident about the rest of the year.

"We are optimistic about our growth prospects in the second half and beyond," Immelt said.

The company's industrial revenues outside the United States were up 23 percent in the quarter, outperforming the overall company, which recorded a 7 percent rise in sales from continuing operations.

Investors said the results showed the Fairfield, Connecticut-based company's focus on emerging markets was paying off.

"GE's strategy of growth in developing nations and energy and infrastructure and healthcare and technology is serving it well," said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group, in Traverse City, Michigan, which holds GE shares.

The rise in orders is a key sign that GE will be able to continue its pace of growth, said Nick Heymann, an analyst at William Blair & Co.

"That's the path back to the future," he said.

GE shares were down 5 cents at $19.11 on Friday morning, a day when fellow blue-chip industrial Caterpillar Inc missed profit forecasts, sending its shares sharply lower and weighing on the broader stock market.

Over the past year, GE shares have risen 26 percent, ahead of the 23 percent rise in the Dow Jones industrial average.

PROFIT TOPS STREET VIEW

The world's largest maker of jet engines and electric turbines said second-quarter profit attributable to common shareholders rose to $3.69 billion, or 35 cents per share, from $3.03 billion, or 28 cents per share, a year earlier.

Factoring out one-time items, profit was 34 cents per share. On that basis, analysts had expected 32 cents, according to Thomson Global Markets I/B/E/S.

Revenue fell 3.5 percent to $35.63 billion, reflecting the sale of a majority stake in GE's NBC Universal business to Comcast Corp. Analysts had expected $34.7 billion.

Profit fell 19 percent at GE's energy unit, which incurred large costs to integrate the $11 billion wave of takeovers it made between September and March. Profit margins on renewable energy equipment deteriorated. Demand was split, with sales of equipment used in oil and natural gas production up 39 percent, and electricity-producing gear up just 1 percent.

"If oil keeps going up and if Congress and the president do something more on renewables, which they keep talking about but haven't done, then margins have a long way to expand," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "They're doing well to keep margins in those businesses as good as they are."

(Reporting by Scott Malone, additional reporting by Nick Zieminski, Ryan Vlastelica and Roy Strom in New York; Editing by Lisa Von Ahn, John Wallace and Matthew Lewis)

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