GE's Q2 Misses, But Synchrony Spin-Off Moves Forward


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General Electric ( GE ) reported earnings Friday and announced details of the spin-off of its retail finance unit, which will be called Synchrony Financial with the ticker SYF.

The earnings report was generally lauded by commentators even though it missed, but most of Wall Street's chatter had to do with Synchrony. General Electric said it plans to sell 125 million shares by the end of July at an offering price of 23 to 26 a share, raising $3.1 billion. GE will retain 85% of Synchrony after the sale.

Before the financial crisis, financing operations generated more than half of GE's revenue, but CEO Jeff Immelt is trying to return the company to its roots as an industrial giant. GE makes jet engines, power generators, oil and gas equipment and medical imaging equipment.

GE reported Q2 earnings of 35 cents a share, a 13% increase from the year-ago quarter and below estimates, along with the company's 3% rise in revenue, which is likely why the stock was down more than 1% for the day.

The company also noted that revenue from industrial operations rose 7%, while its financing unit declined by 6%. Synchrony handles private-label credit cards for big retailers likeWal-Mart ( WMT ) andGap ( GPS ).

GE is involved in numerous acquisitions designed to improve its might in the industrial field. French power-generation equipment maker Alstom accepted GE's offer to acquire it, which is expected to be completed some time next year.

GE pays a quarterly dividend of 22 cents a share, which works out to an annual yield of 3.3%. The next payout is July 25 to stockholders of record on June 23.

Its reliance on the financial sector has had its effect on dividends.

The company offered a 31-cent-per-share quarterly dividend in early 2009, but was forced to reduce it to 10 cents once the effect of the financial crisis kicked in.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Personal Finance Investing Ideas
Referenced Stocks: GE , WMT , GPS

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