Jet engine and oil equipment sales drove GE's profit higher as CEO Jeff Immelt's plan to reposition toward industrial businesses GE takes shape. Fred Katayama reports.
Jeff Immelt's strategic plan to have industrial businesses drive General Electric is taking shape. Strong sales of jet engines and oil and gas equipment offset a shrinkage in financial revenue, propelling quarterly profit up 13 percent. Jack Welch's successor is repositioning the company by shrinking its financial business so that industrial assets will deliver three-quarters of GE's earnings by 2016. To that end, GE said it plans to launch an IPO of its credit card financing unit, Synchrony Financial, this month, its first step in exiting from this business. And it said the gas turbine business that it's buying from Alstom should add to earnings next year. GE beat Siemens last month in a highly publicized battle to buy the energy asset from the French industrial giant. Noting that GE was able to boost profitability of its industrial segment, Immelt said, "The environment continues to be generally positive." GE is seen as a bellwether for the economy because of the breadth of its businesses. GE's stock is down 5 percent this year, the second worst performer on the Dow. But Deutsche Bank analyst John Inch, who has a buy rating, is bullish about its prospects, saying, ".... the results reflect progress the company is making toward simplification... GE's second quarter results favorably contrast with weak reporting results for Danaher, Grainger, and Colfax, reinforcing our view that GE is positioned to outperform in the second half."