General Electric Co. (GE), the household-name U.S. manufacturer, reported earnings for its fiscal 3rd quarter before the opening bell Friday. EPS of 29 cents beat the Zacks Consensus Estimate of 27 cents per share, but revenues in the quarter totaled $35.9 billion, down from the $37.7 billion Zacks Consensus Estimate.
Shares of GE are down 2.7% in pre-market trading, following a slight down day Thursday. The lower revenues for GE stem from lower equipment sales and reduced GE Capital assets. Then again, CEO Jeffrey Immelt suggested these are two things to be hopeful for in the near future: equipment sales going forward are up 9% — 33% in tech infrastructure — and GE Capital has posted a 500% profit increase year over year.
As we saw many times during the course of 2nd quarter earnings season, companies that beat on the bottom line but missed on the top have gotten spanked by shareholders. As the pre-market sell-off in the wake of GE’s earnings news continues to grow (now down over 3% as I write this), it seems the GE story has more to do with the 2Q scenario than it does with the splash of hope provided by Google‘s (GOOG) big beat after the bell Thursday.
GE’s EPS represents a positive earnings surprise of 2 cents per share, or 7.4%. It is the lowest positive earnings surprise of the past 5 quarters, where the 4 preceding averaged a positive earnings surprise of more than 24% per quarter. Analyst revision activity had been slight but generally positive leading up to the earnings announcement, but the 27 cents per share expected stayed consistent throughout the quarter.
The Zacks Consensus EPS Estimates for the 4th quarter and fiscal 2010 are 33 cents and $1.11, respectively, prior to any new guidance from the company. GE shares retain a Zacks #3 Rank (Hold) and a longer-term Neutral recommendation, which had been downgraded from Outperform on June 20, 2010.
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