General Electric Co Plc’s drop in profits and lack of exciting strategic insights disappointed at least one City analyst, and shares were off threepence at 362.5 pence after the company announced its half year results – albeit in a market where stocks were tanking left, right and center in the wake of US Federal Reserve chairman Alan Greenspan dropping heavy hints that he thought share prices had outrun themselves on Wall Street. The reduction in profits at GEC is after exceptional charges of 160m British pounds for restructuring, mainly as a result of recent acquisitions. The analyst, who did not wish to be named, said the exceptionals were unexpected. Pre-tax profits after exceptionals fell 35% to 261m pounds, on revenues up 11.6% to 2.94bn. Since March, the company’s Electronic System & Defence business has bought US electronic identification and interrogation systems outfit Hazeltine Corp, and Finmeccanica SpA’s interest in MAC- Alenia Marconi Communications SpA of Italy, a radio communications company. GEC Alsthom bought AEG AG’s transmission and distribution business in September, and the Industrial group has disposed of GEC Meters, with further disposals and restructuring on the way. GEC says it could cut up to 1,000 jobs at its newly-acquired businesses as part of the 160m pound charge. The rest of the money, some 50m pounds is for asset write-downs in preparation for disposals, although the company would not say which companies were affected. Analysts were also unimpressed with the lack of strategic vision from new chief executive George Simpson, successor to Lord Weinstock, but the company says he will have more to say when next meeting with analysts in June or July. The company said Electronic Systems & Defense saw higher profits and margins from contracts in progress and GEC Alsthom maintained sales and profits in line with expectations. Telecommunications, Consumer Goods, Office Equipment & Printing, Medical Equipment, Industrial Apparatus and Distribution & Trading all saw higher profits than last year. Weak worldwide demand for semiconductors led to reduced profits in Electronic Components, the company said. Overall, cash flow from ordinary activities was positive, while the acquisitions reduced net cash balances by just 104m pounds to 1.05bn, so the famous cash mountain remains pretty much intact despite the change at the helm. With more than 70% of its sales from outside the UK, the recent strengthening of sterling is giving some difficulty in the export market, but GEC says it has a record order book and strong cash position. The firm will pay an interim dividend of 3.25p, a rise of 5.2%
