GE stock drops as profit misses, CEO cuts forecast

Industries Reuters

The General Electric logo is seen in a Sears store in Schaumburg, Illinois, September 8, 2014. REUTERS/Jim Young (Copyright Reuters 2016)

General Electric Co's (GE) third-quarter profit missed Wall Street estimates by a wide margin on Friday and the industrial conglomerate slashed its earnings forecast, sending the year's worst-performing Dow stock down another 6%.

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GE reported adjusted profit of 29 cents a share compared with the 49 cents a share analysts had expected, according to a consensus of estimates from Thomson Reuters I/B/E/S.

GE cut its profit forecast for the full year to $1.05 to $1.10 a share, from $1.60 to $1.70 previously, and said it would generate about $7 billion in cash from operations, down from $12 billion to $14 billion it had forecast earlier.

GE, part of the Dow Jones Industrial Average shares were down 6.7 percent at $22.00 in premarket trading.

GE said weak performance in its power and oil and gas businesses, goodwill impairment and higher-than-expected restructuring costs under new chief executive John Flannery were the main causes of the profit decline.

GE's "solid" performance in other businesses "was offset by a decline in power performance in a difficult market," Flannery said. Industrial cash flow from operations fell mainly "because of lower power volume, resulting in lower earnings and higher inventory.”

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Profit at GE's power business, which makes power plants and related equipment, fell 51 percent in the quarter.

Excluding items, industrial cash flows from operating activities was $1.74 billion in the third quarter ended Sept. 30, down from $2.90 billion, a year earlier.

The company reported a 14.4-percent rise in revenue to $33.47 billion, boosted by the acquisition of oilfield services provider Baker Hughes.

Unadjusted earnings per share from continuing operations fell to $1.80 billion, or 22 cents a share, from $1.99 billion, or 24 cents, the company said. (Reporting by Alwyn Scott in New York and Ankit Ajmera in Bengaluru; Editing by Martina D'Couto and Nick Zieminski)

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