News about General Electric Co.'s (NYSE:GE) 47% drop in earnings has focused on the conglomerate's ailing finance arm. And understandably so.
GE Capital revenue was off 29% in the second quarter from the same period a year earlier, and earnings plummeted 80%. NBC Universal was pummeled as well, reporting a 41% decline in earnings.
But in a company as sprawling as GE, you get a much fuller picture of performance by looking at its other businesses as well and its recent investments. As
we noted after the first-quarter earnings report, GE has been acquiring firms to expand its higher-margin services such as healthcare, aviation and energy.
Of those, energy was the only business that grew in the most recent quarter. Earnings for GE's energy infrastructure unit were up 13%, though revenue was flat. Aviation revenue was off 6%, and healthcare dropped 12%.
Still, the difficult environment hasn't slowed GE's investment in those businesses -- particularly energy and healthcare, which are positioned for a windfall of federal economic stimulus funds. GE is banking on about $20 billion in revenue this year from its
green business investments, which include creation of an advanced storage battery manufacturing facility and a stake in lithium-ion battery maker A123Systems Inc. And GE has this year closed a handful of transactions related to its healthcare business, including a
telemedicine alliance with Intel Corp. (NASDAQ:INTC).
GE hasn't ignored its global finance arm, either. In June, it inked an $8 billion deal for a commercial finance
joint venture with Mubadala Development Co.
The health of GE Capital today and in the future will continue to spark much debate. But by placing bets on its emerging businesses, GE can help offset fallout related to the finance arm. - Suzanne Stevens
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Juergen Lasowski
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Recent earnings and the corresponding run up in banking stocks lately had me hoping (in vain) for better results from GE Capital.