GE 1Q13 Earnings Call Notes

posted in: Notes | 0

This post is part of a series of posts called “Company Notes.” These posts contain quotes and exhibits from earnings calls, conference presentations, analyst days and SEC filings. The quotes are generally pieces of information that I find interesting or helpful to understanding the company, industry or economy and are not meant to provide summaries of the full content of the call. Other posts in this series can be found by clicking here. Full transcripts can be found at Seeking Alpha.

[analyst comment] “I listen to you guys explaining what’s going on here, it’s mind boggling how many moving parts there are here, especially again in GE Capital. At what point do we again kind of maybe evaluate the size and complexity of the organization and make, I guess, a tougher longer term decision on the structure of the company?”

[answer] “Let me just go back and tell you what happened vis-à-vis my expectations. I just want to maybe talk openly and just give you a thought. I think the industrial side was about $200 million weaker than I would have planned for — what our internal plan was. We basically saw Europe — Europe was running negative 5, negative 8 through February. By the end of the quarter, that was negative 15. That was a pretty big move. I think you’ve seen it reflected in a lot of other companies’ announcements. On the short cycle stuff, we saw pushes pretty consistent with what other people had seen.

Now, given the volatile time, the leadership team created multiple hedges in the plan. We had a $500 million – we were always running corporate for less than what we needed. We had other hedges in the company. So by the time you put it all together, we’re basically consistent with commitments, which is the way you’d want us to run the place. So I just think we’re explaining $200 million out of a big company, but we’ve been able to offset that through other hedges and operating disciplines that we’ve got inside the company, which is I think what you want us to do. That’s my story.”

“I think the way we look at, just in total, how we run the company is we don’t necessarily assume things are going to get better. So, not in a catastrophic way, but…I think when you do that calculus, we just think the smartest thing to do is to say to investors, look, we think this could be at the low end of the range because we’re not counting on stuff getting better during the year. If it does, great. But we’re not counting on it. And we’re going to take out costs accordingly so that we kind of hedge our bets. So that’s really the answer. We just don’t count on everything coming back that got pushed, and we don’t count on things that we view as getting incrementally worse getting better.”