What was the primary driver for the significant decline in earnings for General Electric in Q2 2009?

The primary driver for the significant decline in earnings was the challenging global economic environment, which led to a substantial increase in provisions for losses on financing receivables, particularly within the Capital Finance segment. This segment experienced a sharp drop in net earnings and revenues due to higher credit loss provisions and a reduced asset base.

How has the economic downturn impacted GE's industrial segments compared to its financial services segment?

GE's industrial segments, Energy Infrastructure and Technology Infrastructure, showed more resilience with modest revenue declines, although segment profits also decreased. In contrast, the financial services segment, primarily Capital Finance, was more severely impacted, experiencing a much larger drop in revenues and net earnings due to its direct exposure to credit markets and higher loss provisions.

What steps has GE taken to manage its liquidity and capital in light of the economic conditions?

GE has taken several steps to strengthen its liquidity and capital position. These include maintaining substantial cash and equivalents, securing committed credit lines, reducing commercial paper borrowings, and completing long-term debt funding targets. Additionally, GE significantly reduced its quarterly dividend and suspended its share repurchase program to conserve capital and reduce leverage.

Are there any specific segments or business lines within GE that are showing signs of strength or stability?

While most segments experienced declines, GE Capital Aviation Services (GECAS) showed some stability, with revenues increasing 3% and net earnings increasing 3% compared to Q2 2008. However, the overall performance across most segments reflects the pervasive economic challenges.

GE 10-Q Quarterly Report Q2 FY2009 — Revenue, Net Income, EPS

Summary

General Electric Company (GE) reported its second quarter 2009 results, showcasing a significant decline in earnings and revenues compared to the prior year, reflecting the ongoing impact of the global economic downturn. Consolidated net earnings attributable to common shareowners were $2.6 billion, a substantial decrease from $5.1 billion in Q2 2008, with diluted EPS falling to $0.24 from $0.51. Revenues also saw a marked decrease of 17% year-over-year to $39.1 billion. This downturn was particularly evident in the Capital Finance segment, which experienced an 80% drop in net earnings and a 29% decline in revenues, primarily due to higher provisions for losses on financing receivables amidst challenging economic conditions. Despite the headwinds, GE maintained substantial liquidity with $52.3 billion in cash and equivalents and $55.4 billion in committed credit lines, signaling its ability to navigate the difficult market environment. The company also continued its strategic focus on reducing leverage and refining its portfolio. The company's industrial segments, Energy Infrastructure and Technology Infrastructure, showed resilience with modest revenue declines, though segment profits also saw a decrease. NBC Universal experienced an 8% revenue drop and a 41% decline in segment profit. GE highlighted its efforts to strengthen liquidity, including managing collections versus originations at GECS and completing its long-term debt funding targets. The company also took decisive actions to preserve capital, such as reducing its quarterly dividend by 68% and suspending its share repurchase program, signaling a conservative approach in the face of economic uncertainty.

Financial Highlights

41 data points

Beta

Revenue

$12.94B

0.6% Gross Margin

Net Income

$2.69B

0.2% Net Margin

EPS (Diluted)

$2.00

Total Assets

$778.17B

Cash & Equivalents

$52.32B

Free Cash Flow

$3.84B

Financial Statements

Beta

Revenue	$12.94B
Cost of Revenue	$12.45B
Gross Profit	$7.23B
Operating Expenses	$8.93B
Operating Income	$144.00M
Net Income	$2.69B
EPS (Basic)	$2.00
EPS (Diluted)	$2.00

Key Highlights

1Consolidated net earnings attributable to common shareowners decreased 49% to $2.6 billion for Q2 2009 compared to $5.1 billion in Q2 2008.
2Diluted Earnings Per Share (EPS) fell to $0.24 in Q2 2009 from $0.51 in Q2 2008.
3Total revenues decreased by 17% to $39.1 billion in Q2 2009 compared to $46.8 billion in Q2 2008.
4The Capital Finance segment's net earnings dropped by 80% to $0.59 billion in Q2 2009 from $2.9 billion in Q2 2008, driven by higher provisions for losses on financing receivables.
5GE maintained strong liquidity with $52.3 billion in cash and equivalents and $55.4 billion in committed credit lines at June 30, 2009.
6The company reduced its quarterly common stock dividend by 68% to $0.10 per share, effective Q3 2009, to conserve capital.
7Loss from discontinued operations, net of taxes, was $0.19 billion in Q2 2009 compared to $0.32 billion in Q2 2008.

GENERAL ELECTRIC CO Quarterly Report for Q2 Ended Jun 30, 2009

Summary

Financial Highlights

Key Highlights

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