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21 Jul 17. GE shares fall as profit slumps, investors await new CEO’s targets. General Electric Co’s (GE.N) shares dropped sharply on Friday after it posted a 59-percent decline in second-quarter profit and put off an expected cut to 2018 earnings targets until November, when new CEO John Flannery will be four months into his job.
The maker of power plants, jet engines, medical scanners and other industrial equipment said profit and sales declines largely reflected sale of its appliances business.
It beat analyst expectations on adjusted profit, but cash flow was weak and GE said full-year profit and cash flow will be at the low end of its forecasts. GE also said it would update its 2018 earnings target of $2 a share in November, later than analysts had expected. Analyst consensus 2018 estimate is $1.73, according to Thomson Reuters I/B/E/S, already suggesting a significant cut. The length and scope of the review raised concern, since GE has just come through major shifts in its portfolio.
“It’s discouraging that we’re going to wait again for the company to perform as we wait for the new CEO to review everything,” said Jim Corridore, analyst at research firm CFRA, which cut GE shares to “hold” after Friday’s results. Incoming CEO Flannery acknowledged on a conference call that his review would take time, but said it had not altered GE’s 2017 outlook.
Still, the stock could be in “in a state of limbo” until the review is finished, Deane Dray, analyst at RBC Capital Markets, said in a note. GE’s cash flow was below expectations and also weighed on the stock, said Jeff Windau, analyst at Edward Jones. “People want to get the answers sooner” to Flannery’s review. (Source: Reuters)
21 Jul 17. Honeywell beats profit estimates, lifts full-year forecasts. Honeywell International Inc
The company’s shares rose as much as 1.8 percent to a record high of $137.37. Sales in Honeywell’s aerospace business, which activist investor Daniel Loeb wants to be spun off, fell about 3 percent to $3.67bn in the second quarter ended June 30, but the drop was much smaller than the company’s forecast of 5 to 7 percent. The unit, which makes jet engines and provides spare parts, repair, overhaul and maintenance services, benefited from strength in its commercial aviation after-sales business and growth in U.S. defense volumes, the company said. Honeywell is reviewing Loeb’s demand and the company is expected to announce a decision by early fall. Loeb, who runs hedge fund Third Point LLC, has said a spin off could create more than $20bn in shareholder value. Meanwhile, Honeywell said it was looking to scale up its smaller businesses.The company may look at M&A opportunities to boost its performance materials and technologies (PMT) business and safety and productivity solutions (SPS) unit, Chief Financial Officer Thomas Szlosek told Reuters. “Our most prominent (M&A) opportunities are in PMT and in safety and productivity solutions.” Szlosek said the recent Intelligrated deal could be a platform to embark on a whole new path of M&A around the supply chain, logistics and freight management. The company acquired Intelligrated Inc, which installs automated material handling equipment in fulfillment centers and warehouses that serve online retailers, for $1.5bn. Sales in Honeywell’s PMT unit, which makes catalysts and adsorbents used for petroleum refining, dropped about 8 percent to $2.24bn in the quarter. Honeywell had forecast a decline of 10 percent to 12 percent. The unit benefited from higher sales of Solstice low glob