GE reports weak demand for oil, transport equipment; profit beats
By Alwyn Scott
NEW YORK (Reuters) - General Electric Co (GE.N: Quote) on Friday reported weak demand for new oil, gas and transportation equipment, raising concerns about its full-year performance and sending its shares down as much as 2.8 percent.
Still GE, long considered a bellwether for the U.S. economy, posted adjusted second-quarter earnings of 51 cents a share that topped analysts' estimates of 46 cents, according to Thomson Reuters I/B/E/S.
GE also affirmed its 2016 operating outlook and forecast that strong growth would continue in the second half.
But investors focused on a 16 percent decline in new orders from continuing businesses amid weakness in oil and gas prices and commodity markets that undercut demand, raising questions about its forecast.
"You're counting on the second half being pretty strong, especially in the power business," said Jeff Windau, an analyst at Edward Jones in St. Louis, referring to power plant sales.
"Those are capital intensive purchases and if those get pushed out even just a little bit" it could weaken GE's performance.
GE expects sales for the year to grow at the low end of its 2 percent to 4 percent target range. But it said reduced orders, which represent bookings for future sales, would not affect revenue, which comes as deliveries of actual products and is on course.
"We have an enormous backlog (of orders)," Chief Financial Officer Jeff Bornstein said in an interview. "We don't view it as a concern for future revenue." Continued...