July 19 - General Electric's operating profit fell shy of forecasts but the manufacturer's outlook shows it is upbeat about the economy. Fred Katayama reports.
GE's second quarter results weren't eye-popping. But amid low-expectations, Wall Street preferred to focus on General Electric's narrow profit beat over the dip in operating income and revenues. What surprised analysts: GE managed to expand its profit margins for its industrial businesses. And profitability recovered at its power and water unit even though that segment's revenues fell sharply. GE, seen as an economic bellwether, was positive about its outlook and the U.S. economy. It says it's on track to hit its target for growing profitability. CEO Jeff Immelt said, "Emerging markets remain resilient, and in the U.S. we saw strong growth in orders this quarter. Europe is stabilizing but still challenged." Income grew at six of its seven industrial businesses, led by aviation. GE has been trying to expand its manufacturing business while shrinking Its finance unit, where earnings fell 9 percent. Deutsche Bank analyst John Inch is bullish on GE, "We expect sequential quarters to improve. Overall, we view the 2Q results to represent a key turning point." Its stock could use some help. It has lagged the overall market, rising less than 13 percent this year.