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Friday, April 17, 2009

GE, HRS, REITs

S&P 500: +4.28 (+0.49%)

General Electric (GE) +0.98%
GE’s earnings came in above estimates thanks to strong performance from the company’s infrastructure businesses. The equipment and service contract backlog was $171 billion, just $1 billion less than it was at the end of 2008. Still, GE Capital weighed on revenues, which fell 9 percent to $38.4 billion.

Profit at GE Capital declined 58 percent to $1.12 billion, but all of this came from a $1.2 billion tax benefit. The company reiterated that the finance arm will not need additional capital and will turn a profit in 2009.

Profit and sales rose at the Energy Infrastructure segment, led by power-plant turbine and service contracts. This is segment has been a bright spot in the past few quarters and will continue to shine for years to come.

The Technology Infrastructure group also posted higher profit as demand for jet engines and service, which is a bit surprising considering project delays at Boeing and Airbus.

Not much changed for GE’s other businesses. The Healthcare unit is still suffering from slower sales of medical-imaging equipment to U.S. hospitals and NBC Universal is seeing advertisers pare purchases in the recession. The consumer segment remained relatively flat.


Harris Corp (HRS) +2.06%
Harris agreed to acquire Tyco Electronics’ wireless unit for $675 million, adding state and local government markets. The move is part of Harris’ strategy to increase diversification, since they are so heavily leveraged to the U.S. defense sector.


REITs
REITs continued their dramatic upswing, and the Vanguard REIT ETF (VNQ) is now up 28 percent in the second quarter. Sentiment for the asset class is improving with each round of successful fund raising and investors are returning their focus to leasing fundamentals rather than balance sheet deficiencies.


Quick Hits

Peter Lazaroff, Junior Analyst

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