On Friday, General Electric Co posted weak demand for new gas, oil and transportation equipment and increased concerns about its performance for the full year, which helped to push down its shares by up to 2.9%.
Nevertheless GE, considered one of the bellwethers for the economy in the U.S., posted adjusted earnings for the second quarter of 52 cents per share, which topped estimates on Wall Street of 47 cents.
GE affirmed its operating outlook as well as forecast for 2016 that strong growth is going to continue during the second six months of 2016.
However, investors were focused on a decline of 16% in GE new orders from its continuing businesses amidst weakness in gas and oil prices, as well as in commodity markets that undercut the demand and raised questions about it annual forecast.
GE is expecting its sales for the full year to increase to the lower end of its target range of between 2% and 4%, but said smaller orders that are bookings for their future sales will have an effect on revenue that comes as deliveries of products and that is on course.
CFO Jeff Bornstein said the company had an extremely large number of back orders and does not consider it to be of concern for the future revenue.
Nearly 70% of the sales expected in 2016 by GE already are in their backlog page.
Investors reacted as well to GE being $1 billion short of free cash flow estimates for the just ended quarter. That was driven by slower collection of accounts receivables.
With its stock having been on a very good run, a little taking of profit is always understandable.
Shares of GE dropped 2.2% in midday Friday trading on the NYSE.
Other segments of its business ended the quarter well. Revenue at GE increased by 15% to over $33.48 billion helped in part by the acquisition last year of Alstom.
Sales from its industrial operations called its organic segment were down 1% ending the quarter at $34.4 billion, which is less than analysts were expecting. Power sales not including Alstom were 2% higher.
Net profit ended the quarter at $2.73 billion equal to 30 cents per share, in comparison to a loss of more than $1.36 billion equal to 13 cents per share.
Order backlog at GE was up by 1.3% ending the quarter at $320 billion in comparison to $1.35 billion and 13 cents per share.