(Adds investor comment, details on retail finance IPO, results)
By Lewis Krauskopf
July 18 General Electric Co reported a
13-percent jump in quarterly net income Friday on improved sales
of its jet engines and oil and gas equipment, and said it was
targeting the initial public offering of its private-label
credit-card business for the end of the month.
The U.S. conglomerate has been planning a partial IPO of the
North American retail finance business, to be called Synchrony
Financial, as part of a plan to exit the business and slim down
its overall GE Capital unit.
GE expects a 15 percent offering would be worth about $3.1
billion at the mid-point of the IPO, according to a company
presentation. It plans to retain about $17 billion of the
business, with a full separation targeted for late next year.
Shares of GE, whose quarterly profit matched Wall Street
targets, rose 1.7 percent in premarket trading.
The spin-off is a key part of Chief Executive Officer Jeff
Immelt's plan to boost GE's earnings contribution from its
industrials businesses to 75 percent by 2016, from 55 percent
last year. Toward that end, GE last month agreed to buy the
power turbine and other energy assets of France's Alstom for
$16.9 billion, its biggest-ever deal.
"GE has always been a steady re-allocator of portfolio
assets," said Tim Ghriskey, chief investment officer with
Solaris Asset Management, which owns GE shares. "It's nice to
see that pick back up ... To me, that's what can really move the
GE's second-quarter net income rose to $3.55 billion, or 35
cents per share, from $3.13 billion, or 30 cents a share, a year
Excluding items, operating earnings of 39 cents a share
matched the average estimate of analysts, according to Thomson
Revenue rose 3.4 percent to $36.23 billion, slightly below
the $36.3 billion expected by analysts.
Sales rose 15 percent for its aviation segment, and 20
percent for its oil and gas unit.
Overall, revenue for GE's industrial businesses rose 5
percent, excluding acquisitions, and the company kept its
forecast of organic industrial revenue growth of 4 percent to 7
percent for the year.
GE's profit margin for its industrial businesses, a closely
watched barometer by Wall Street, expanded 0.2 percentage point
to 15.5 percent.
The company's backlog of equipment and service orders rose
10 percent to $246 billion. Orders for new equipment in the
quarter dipped 3 percent, after also declining in the first
quarter, although service orders rose 14 percent.
GE last month prevailed in a two-month battle to acquire
Alstom's power assets, fending off initial French government
resistance and a bid from rival industrial giants.
The deal is expected to close in 2015 and add 6 cents to 9
cents per share to earnings in 2016, the company said Friday.
Analysts expect GE to earn $1.97 per share in 2016.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and