Conglomerate General Electric Co. (NYSE:GE) rolls out second-quarter earnings on Friday, giving analysts a look into how American industry is faring through the recession.
Analyst estimates for earnings per share range from 21 cents to 27 cents, with the consensus estimate coming in at 24 cents per share. Key metrics investors will be looking at include the performance of GE Capital, the energy infrastructure unit and the industrial after-market, according to
iStockAnalyst.
It's been a rough year so far for the company as it
lost its AAA rating and was forced to
slash its dividend a month after CEO Jeff Immelt said neither would happen.
The performance of GE Capital is sure to be the biggest
point of interest for investors, especially in light of the troubles at CIT Group Inc. (NYSE:CIT), which may file for bankruptcy as early as Friday. (The Deal Pipeline subscribers can see more
here.)
GE Capital Finance is expected to earn around $1.2 billion in the second quarter and hit breakeven for the year.
Borrowing by GE's finance arm has been high thanks to its eligibility for the Temporary Liquidity Guarantee Program, which allowed the unit to issue more than $70 billion in debt backed by the U.S. government's Federal Deposit Insurance Corp.
GE Capital has used the program more than any other financial firm, but it could soon face trouble. The Treasury Department is looking to
tighten standards for the program, which would basically disqualify GE, causing its cost of capital to skyrocket.
Outside of the finance arm, investors will be watching the other units that
contributed most to its first-quarter numbers, such as Aviation services, which saw revenue rise 18% in the first quarter, and Energy Wind Turbine Services, up 25%. -
George White
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