The U.S. conglomerate has been planning a partial IPO of the
North American retail finance business, to be called Synchrony
Financial, as part of a plan to exit the business and slim down
its overall GE Capital unit.
GE expects a 15 percent offering would be worth about $3.1
billion at the mid-point of the IPO, according to a company
presentation. It plans to retain about $17 billion of the
business, with a full separation targeted for late next year.
Shares of GE, whose quarterly profit matched Wall Street
targets, rose 1.7 percent in premarket trading.
The spin-off is a key part of Chief Executive Officer Jeff
Immelt's plan to boost GE's earnings contribution from its
industrials businesses to 75 percent by 2016, from 55 percent
last year. Toward that end, GE last month agreed to buy the
power turbine and other energy assets of France's Alstom for
$16.9 billion, its biggest-ever deal.
"GE has always been a steady re-allocator of portfolio assets,"
said Tim Ghriskey, chief investment officer with Solaris Asset
Management, which owns GE shares. "It's nice to see that pick
back up ... To me, that's what can really move the stock."
GE's second-quarter net income rose to $3.55 billion, or 35
cents per share, from $3.13 billion, or 30 cents a share, a year
Excluding items, operating earnings of 39 cents a share matched
the average estimate of analysts, according to Thomson Reuters
Revenue rose 3.4 percent to $36.23 billion, slightly below the
$36.3 billion expected by analysts.
Sales rose 15 percent for its aviation segment, and 20 percent
for its oil and gas unit.
Overall, revenue for GE's industrial businesses rose 5 percent,
excluding acquisitions, and the company kept its forecast of
organic industrial revenue growth of 4 percent to 7 percent for
GE's profit margin for its industrial businesses, a closely
watched barometer by Wall Street, expanded 0.2 percentage point
to 15.5 percent.
The company's backlog of equipment and service orders rose 10
percent to $246 billion. Orders for new equipment in the quarter
dipped 3 percent, after also declining in the first quarter,
although service orders rose 14 percent.
GE last month prevailed in a two-month battle to acquire
Alstom's power assets, fending off initial French government
resistance and a bid from rival industrial giants.
The deal is expected to close in 2015 and add 6 cents to 9 cents
per share to earnings in 2016, the company said Friday. Analysts
expect GE to earn $1.97 per share in 2016.
(Reporting by Lewis Krauskopf; Editing by Lisa Von Ahn and