Afternoon Review

General Electric (GE) +5.72%
GE, the world’s biggest maker of power-plant turbines, won an order valued at about $3 billion to provide electricity-generating equipment and services to Iraq. It is the largest single order in the history of the GE Energy segment with GE providing 56 of its 9E models turbines capable of supplying 7,000 megawatts of electricity (nearly doubling the country’s generating capacity).

The order comes amid concern the slowing global economy may crimp the pace of deliveries as some utilities struggle for cash for capital investments. In the third quarter, GE Energy had $7.9 billion in orders, up 18 percent. This new award adds to the $4 billion already ordered by countries including Saudi Arabia, Kuwait and Qatar over the past two years.

In separate news, GE reaffirmed its outlook for the fourth quarter and full-year 2008, but said that it will no longer provide specific quarterly earnings guidance. The company also reiterated its dividend, which has been a point of concern for many investors.


ITT Corporation (ITT) +8.88%
ITT reaffirmed its 2008 earnings forecast and said 2009 profit will be higher than the average estimates (according to Bloomberg). Revenue is projected to be down 2 percent to 6 percent from anticipated 2008 sales, including the expected negative impact of foreign currency exchange.

The company said its management will recommend that the board approve a dividend increase of 22 percent to 85 cents for next year at its February meeting. ITT also said the board approved an indefinite extension of the company’s $1 billion share repurchase program that was set to expire in November 2009. ITT has bought back about $431 million of its common stock under this program.


Johnson Controls (JCI) -1.09%
JCI withdrew its 2009 guidance due to “the rapid decline in global automotive production and uncertain industry conditions.” The company’s lowered production estimates for 2009 (made just two months ago) from 12.3 million vehicles to 9.3 million vehicles in North America, and 21.2 million vehicles to 16.2 million vehicles in Europe.

Actions to reduce costs and the performance of its building efficiency and power solutions businesses should keep JCI profitable in 2009, according to the company.


Transocean (RIG) -0.23%
Transocean received approval to change the place of their incorporation from the Caymans to Switzerland. This is likely to result in the company being removed from the S&P 500 and the Russell 2000 indices. This implies approximately 45.1 million shares are to be sold, which may put some near-term selling pressure on the stock.


Bank of America (BAC) +7.02%
BAC traded lower for most of the day (until the Fed’s rate cut decision) in response to an analyst saying the bank will need to raise more capital to offset rising loan losses.


Quick Hits

• Another View: Blaming the SEC (this article was written by a former SEC employee)
• This article shows that not all real estate is depreciating in value.
  
  

Peter Lazaroff, Junior Analyst