Analyst Don MacDougall says GE announced the IPO of Genworth Financial, another step in the company's portfolio transformation. GE also announced plans to raise its dividend. These moves will impact earnings by about 3 cents per share in 2004. MacDougall says other adjustments may be necessary for integration costs and write-downs associated with acquisitions closing in 2004; these costs could be material, but non-recurring.
MacDougall set a $1.74 2005 earnings per share estimate. With earnings likely stabilizing, and the bulk of GE's portfolio transformation behind the company by the first half of 2004, he thinks the story looks healthier, though the high valuation leaves him comfortable with a neutral rating.