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Market Update

Our Take on GE's Fourth Quarter

Profit was below expectations, but the firm sees double-digit earnings growth in 2012, according to Morningstar's Daniel Holland.


 General Electric's (GE) fourth-quarter earnings of $0.37 per share were slightly below our estimates for the quarter. The shortfall was largely driven by an additional charge of $0.02 per share related to excess reserves necessary for GE Money's divested Japanese bank. Aside from that, the firm's results were in line with our expectations, and we maintain our fair value estimate at this time.

GE generated $27.1 billion of industrial revenue in the quarter, a 10.6% improvement relative to the prior year with only the consumer business declining. We are encouraged by the strength of energy revenue and orders in the quarter, though the weakness in wind is still having a negative impact on operating margins. The company expects for the wind business to be beneficial starting next year because of customers buying in advance of the expiration of the renewable energy tax credit.

Daniel Holland does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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