GE Q2 profit falls, scales down industrial outlook

GE Q2 profit falls, scales down industrial outlook
General Electric's 2Q profit tumbles 49 pct on finance unit struggles, weak demand for goods

General Electric Co.'s second-quarter profit was sliced nearly in half, the company said Friday, as the recession drove down earnings at its finance unit and smothered demand for its wide-ranging industrial goods.
Although earnings beat Wall Street forecasts by a penny, GE's revenue fell $3 billion short of expectations, helping push down shares 6 percent. Quarterly sales fell across its divisions, from health care to broadcasting, suggesting that the recession is still sapping demand for goods and services.

That appeared to be troubling news for the nation's economic health since GE's businesses touch nearly all facets of the economy and investors were hoping sales would show flashes of strength.

The Fairfield, Conn.-based company is also retreating from a more optimistic outlook for its industrial businesses that make everything from microwaves to wind turbines. It's now saying those divisions could break even rather than show a profit this year.

GE 's second-quarter net income totaled $2.6 billion, or 24 cents per share, after paying preferred dividends. That fell 49 percent from $5.1 billion, or 51 cents per share, a year earlier. Revenue declined 17 percent to $39.1 billion.

Analysts polled by Thomson Reuters expected GE to earn 23 cents per share on revenue of $42.16 billion.

The first half of 2009 has been a difficult one for GE, one of the world's largest companies. It cut its dividend sharply to preserve cash, lost its vaunted Triple-A credit rating, and saw its share price plummet on fears that things could get worse for its lending unit.

GE Capital, which lends money on everything from credit cards to commercial real estate, posted a modest profit of $590 million in the second quarter. But those results were 80 percent lower than a year earlier, further proof that GE Capital is struggling with losses on bad loans. GE boosted reserves for loan losses to $6.6 billion during the quarter.

Still, GE Capital "remains on track to be profitable for the full year," Jeff Immelt, GE's chief executive, said.

GE Capital has tried to compensate for its weaknesses by scaling back its reliance on riskier debt and lowering costs through steps like cutting staff. It has also been helped by tax credits that helped it dodge a loss during the first three months of the year.

But GE Capital's second-quarter earnings show that the unit continues to face serious challenges. For example, GE's real estate unit, which owns office buildings and makes loans for commercial properties, posted a $237 million loss compared with $484 million in profits a year earlier.

"We are still very cautious about the real estate outlook," said Keith Sherin, GE's chief financial officer.

The company plans to give a detailed review of GE Capital later this month, the second time this year it will open its books as it tries to convince investors that there are no big losses lurking.

As GE Capital founders, the company has looked to its industrial divisions for stability. But those businesses, which make products like home appliances, train locomotives, diagnostic equipment for hospitals and jet engines, have also struggled during the recession.

GE said Friday that its industrial units should just break even this year. Previously, the company had said earnings could reach $5 billion. Read Article... http://finance.yahoo.com/news/GE-Q2-profit-falls-scales-apf-2602881202.html?x=0&sec=topStories&pos=3&asset=&ccode=


Comment Trendsbridge: Of all the troubling signs the Economy is not back on track and the crisis is not over yet this is one of the worst.

ING to sell off $10 billion in operations

ING to sell off $10 billion in operations
ING, the Dutch bank and insurer, plans to sell operations that could raise up to $10.6 billion

AMSTERDAM (AP) -- ING NV, the Dutch bank and insurer, said Thursday it plans to sell operations it says could raise up to euro8 billion ($10.6 billion).
The move, unveiled alongside a reshuffling of business units to simplify the company structure, is an increase from a previous target announced in January to raise euro3 billion.
So far, ING has sold its Canadian operations for euro1.4 billion.
"Next to a number of leading positions in key markets, a group of smaller businesses with no clear outlook for market leadership consumes a disproportionate amount of capital," the company said in a statement.
Shares rose 9.9 percent to euro 5.775. They have had a wild ride, falling from above euro25 a year ago and trading as low as euro2.30 in March.
The company's statement Thursday didn't specify which business it would definitely sell or set any time frame for achieving the target. It also didn't say whether there was any interest from buyers.
ING said it now plans to focus mostly on European banking, with extra focus on Belgium and the Netherlands. However, it intends to continue offering both banking and insurance in Europe, Asia and the United States.
It said it doesn't plan to sell its online banking service, ING Direct, and that its life insurance businesses in China and Japan were "under review."
Incoming Chief Executive Jan Hommen was to address investors at a meeting later Thursday. His predecessor, Michel Tilmant, resigned in January after saying ING expected to post a large loss in the fourth quarter, which turned out to be a loss of euro3.1 billion.
ING has received significant aid from the Dutch government since the financial crisis began. Last year it received a euro10 billion investment lifeline to shore up its equity base.
And in January the state assumed most of the risk for euro27.7 billion in troubled U.S. mortgage-backed securities ING owns.

ING said Thursday it has cut 3,500 jobs so far since announcing plans to cut 7,000 in January, around 5 percent of its work force. As of Thursday, ING said it employs 25,000.
Hommen, a former chief financial officer of both Philips Electronics and Alcoa, said that ING's tier 1 capital ratio -- the most widely used measure of a bank's solvency -- was 9.3 percent at year end.

SPLITTING OPERATIONS
(Source Reuters)
ING will start managing its bank and insurance activities separately but Hommen declined to comment directly when asked if this could lead to a future split of the group, saying only "it is a way to make our organization easier and focused."
ING, which ranked as the world's twelfth-largest bank by market value last February, is organized along six business lines, with three focusing on retail banking, wholesale banking and ING Direct, and three on regional insurance groups.
ING will wind down its retail bank operations in the Ukraine, review life insurance activities in China and Japan, and divest U.S. insurance activities such as financial products, group reinsurance, and annuity books when possible.
When ING sold its ING Canada stake in February, analysts earmarked ING's stake in Brazilian insurance group Sul America as a possible divestment.
http://www.reuters.com/article/newsOne/idUSTRE5380Y020090409

Vastgoedmarkt.nl: ING wordt opgedeeld
(Bron RTL.nl, rtlz)
Het einde van ING Real Estate als aparte onderneming van ING lijkt nabij. ING gaat de organisatie richten op de kerntaken en zich concentreren op Europa. Ook zou bankieren en verzekeren worden gesplitst.
Bronnen
Twee bronnen hebben tegenover Vastgoedmarkt bevestigd dat ING waarschijnlijk al donderdagmorgen bekend zal maken dat de ING Group wordt gestroomlijnd en dat de activiteiten van de bank en de verzekeringstak uit elkaar worden gehaald.
Door deze strategie wordt ING Real Estate opgesplitst. Eind vorig jaar had de vastgoedonderneming met ruim 100 miljard euro mondiaal de grootste portefeuille vastgoed.
Saneren
De divisies Development en Finance zullen worden ondergebracht bij de verzekeringstak, terwijl Investment Management wordt gestald bij de bank. Het zou de bedoeling zijn de grote vastgoedportefeuille van ING snel in omvang te verkleinen om daarna te verzelfstandigen of te verkopen.

When Home Prices Hit Bottom

When Home Prices Hit Bottom
by Amanda Gengler
Friday, April 3, 2009 provided by Fortune on CNNMoney.com

The end may be in sight -- and getting a better sense of when it's coming can help you make the smartest buying and selling decisions.

Call it the Great Housing Paralysis of 2009. If you're hoping to buy your first home or invest in a second one, you're probably sidelined, unsure when to jump in. If you want to sell, you're thinking it may be better to wait. And even if you don't plan to either buy or sell anytime soon, watching one of your biggest assets tank is about as much fun as being chased by hornets. When will the pain stop?
Nationwide, home prices will bottom out at the end of this year, according to the forecasters at Moody's Economy.com. Median prices will probably fall another 10% on top of the 27% they've plummeted since their 2006 peak. That prediction assumes that President Obama's various recovery efforts - including billions to slow foreclosures and goose bank lending, plus a tax credit to most 2009 buyers who haven't owned in the past three years - will have some effect. If they don't, says Economy.com's Mark Zandi, the bottom could come as late as 2011.
Read article...
http://finance.yahoo.com/real-estate/article/106862/When-Home-Prices-Hit-Bottom

S&P: Home values post 18.2 pct annual drop in November

S&P: Home values post 18.2 pct annual drop in November.
The Standard & Poor's/Case-Shiller 20-city housing index released Tuesday tumbled by a record 18.2 percent from November 2007, the largest decline since its inception in 2000. The 10-city index dropped 19.1 percent, tied with October for the biggest drop in its 21-year history.
The sharpest drop on record.

Download the PDF

http://www2.standardandpoors.com/spf/pdf/index/CSHomePrice_Release_012724.pdf