Even as the U.S. Department of Defense issued a stop order on a fighter engine General Electric Co. had under development, GE appeared to rev up its business on several other fronts in the first quarter.
GE earned $3.6 billion in the first quarter on revenue of $38.4 billion, up 58 percent and 6 percent respectively from a year earlier. It marked the conglomerate”™s fourth consecutive quarter of double-digit, year-over-year earnings growth.
In the first quarter, GE announced a half-dozen acquisitions in its energy and health care businesses, while divesting its ownership stake in NBC Universal (NBCU) to Comcast Corp. For the third time in the past year GE raised its dividend, by a penny to 15 cents a share, and bought back $2.3 billion shares of stock. The company scheduled its annual shareholders”™ meeting for April 27 in Salt Lake City.
“I think what we want to convey is just confidence in the company, first and foremost, and the fact that for a broad base of investors the dividend is important,” said CEO Jeff Immelt, in a conference call with investment analysts. “We think that”™s a good message to send today: good confidence in the company, the fact that we”™ve really effectively redeployed the capital from NBCU ”¦ We want the dividend to be an effective payout ratio, a good yield, very reliable. And so over time, we”™re going to get back to an annual dividend increase … that investors can count on, and we”™ll just see how that plays out.”
In time, subsidiary GE Capital will once again be contributing to the company”™s dividend as well, according to Keith Sherin, CFO of GE. Alongside Fairfield-based GE, one of the largest employers in Fairfield County via its Norwalk headquarters and large offices in Stamford, GE Capital earnings were up more than 200 percent in the first quarter, with revenue up 3 percent to $13.2 billion.
“We”™re obviously feeling pretty good about the progress in GE Capital,” Sherin said. “You can see the capital ratios. You can see the pretax earnings growth. You can see some stabilization in real estate. So I think all those signs are good.”
GE Capital is still absorbing hits to its GE Real Estate lending unit, however, which lost $358 million in the first quarter. Sherin said GE Real Estate would avoid cutting its losses on any distressed properties and instead attempt to wait out a recovery in their values.
“I would not anticipate large sales at significant losses in the real estate business,” he said. “We believe in our properties and our values. We feel like we”™re going to be able to recover them on the equity side, and that”™s coming through.
“There are some uncertainties we have,” Sherin added. “The Fed will transition to be our regulator in the summer ”¦ We think we”™re going to be above what the levels are of capital that are required for all the different criteria, but that isn”™t exactly finalized.”
GE stated it has yet to fully calculate the impact of the Japan earthquake and subsequent crisis on its results, only saying it had sustained minimal losses to its own operations and that it is reaching out to assist the country and its residents in any way it can.
“If you go back to the Kobe earthquake ”¦ there was more stimulus put into the overall economy in Japan after that,” Immelt said. “But I just think it”™s too early to tell what the impact is going to be.”
