MetLife, GE close long-delayed bank deposit deal

NEW YORK, Mon Jan 14, 2013 — MetLife Inc. has closed the sale of its deposit-taking business to General Electric Co., a move that allows the largest U.S. life insurer to start the process of dropping registration as a bank holding company.

For GE, the deal will allow its GE Capital unit to rely less on borrowing by providing it with an alternative source of funding for its lending.

The deal, in which GE will take on about $6.4 billion in bank deposits had been in the works for more than a year, with regulatory review the main reason for the delay.

MetLife is not disclosing any other financial terms, said MetLife spokesman Chris Breslin.

“This is really good news for MetLife,” said Vincent Lui, an equity analyst for Morningstar. “It’s one last hurdle they need to clear in order to exit itself from a bank holding company structure.”

As a bank holding company, MetLife was subject to oversight by the Federal Reserve. In March the insurer failed a stress test and was blocked by the Fed from raising dividends or buying back shares.

MetLife said the deal reflected its desire to focus on insurance and employee benefits. It said it has started the process of deregistering as a bank holding company.

GE finance arm resumes paying quarterly dividend to parent

FAIRFIELD, Conn., Wed May 16, 2012  – General Electric Co.’s finance arm will resume paying a quarterly dividend to the parent company and make a special payout of $4.5 billion, paving the way for the largest U.S. conglomerate to increase its dividends and buybacks.

GE shares rose 3 percent to $18.90 in premarket trading. They closed at $18.40 on the New York Stock Exchange on Tuesday.

Raising its dividend and buying back shares are top priorities for GE this year as it tries to repay shareholders for the $12 billion in common stock that it sold in October 2008 during the financial crisis.

GE historically received a dividend from its finance arm but halted that practice in the fourth quarter of 2008.

The GE Capital dividend was subject to approval from the Federal Reserve, which became its regulator in 2011.

GE said on Wednesday the board of GE Capital declared a quarterly dividend of $475 million payable to GE in the second quarter. The special dividend will be paid this year.

“With this announcement, GE Capital will return cash to GE beginning this quarter,” GE CEO Jeff Immelt said in a statement.

“This action demonstrates the strength of GE Capital and the significant actions taken to strengthen its liquidity, capital, asset quality and profitability.”

General Electric invests in Texas shale gas pipeline operator

FAIRFIELD, Conn., Fri Mar 16, 2012 – General Electric Co. has sunk its teeth further into the energy infrastructure and services business by investing in Howard Energy Partners, a natural gas pipeline operator in the booming Eagle Ford shale fields of south Texas.

GE Energy Financial Services will pay an undisclosed amount for 30.6 percent of Howard, GE said on Thursday. Other investors include Crosstex Energy LP, Quanta Services Inc. and Clear Springs Energy Company LLC, and the deal is expected to close in April.

“The shale boom has created the need for a dramatic build out of oil and gas infrastructure in North America, requiring significant capital,” John Shepherd, a managing director at GE Energy Financial Services, said in a statement.

Howard will use the money to help fund its purchase of the natural gas gathering assets of Meritage Midstream Services in south Texas, GE said.

At the closing of that deal, Howard will own and operate 450 miles (724 km) of pipelines in the state, which can handle more than 175 million cubic feet per day, and the San Antonio, Texas-based company has plans to grow to meet demand.

The so-called “midstream,” referring to infrastructure that moves oil and gas from the wellhead to its buyers, has become a hot market with the growth of North American shale development.

After ‘lemming’ exodus, manufacturers look to U.S

WASHINGTON – Big manufacturers moved their production out of the country too quickly over the past decades and now see a competitive advantage in building up their footprints back home, top executives said on Monday.

The chase for lower-paid workers drove the migration, which resulted in employment in the U.S. manufacturing sector falling by 40 percent from its 1980 peak. But big companies including Boeing Co. and General Electric Co. are now finding that the benefit of lower wages can be offset by higher logistics and materials costs.

“We, lemming-like, over the last 15 years extended our supply chains a little too far globally in the name of low cost,” said Jim McNerney, CEO of world No. 2 planemaker Boeing. “We lost control in some cases over quality and service when we did that, we underestimated in some cases the value of our workers back here.”

Boeing in particular ran into extensive delays in the launch of its 787 Dreamliner aircraft, handing off much of the manufacturing responsibility to outside suppliers, leaving the launch of the fuel-efficient aircraft some three years behind schedule.

“You are going to see more (manufacturing) come back to the United States, and that’s in part for business reasons and in part because we want to be good citizens,” McNerney said.

McNerney spoke at a Washington event organized by GE aimed at promoting the competitiveness of the U.S. economy. The nation has been slow to recover from a brutal 2007-2009 downturn and high unemployment – 8.3 percent in January – stands as one of the main barriers to a brisker recovery.

General Electric to hire 5,000 U.S. veterans, investing in plants

WASHINGTON – General Electric Co. plans to hire 5,000 U.S. military veterans over the next five years and to invest $580 million to expand its aviation footprint in the United States this year.

The largest U.S. conglomerate unveiled the moves ahead of a four-day meeting it is convening in Washington starting on Monday to focus on boosting the U.S. economy, which has been slow to recover from a brutal 2007-2009 recession.

“We should have the confidence to act and to restore American competitiveness,” Chief Executive Jeff Immelt, a top adviser on jobs and the economy to President Barack Obama, said in a statement.

The U.S. unemployment rate – seen as the main barrier to a move vibrant recovery – fell to a near three-year low of 8.3 percent in January, helped in part by the manufacturing sector adding about 50,000 workers. Even with that improvement, 23.8 million Americans remain out of work or underemployed, which is keeping the economy a key issue heading into November’s presidential elections.

The world’s largest maker of jet engines plans this year to open three new U.S. aviation plants, in Ellisville, Mississippi; Auburn, Alabama, and Dayton, Ohio. After cutting headcount significantly during the recession – as did its major peers including United Technologies Corp and Caterpillar Inc. – GE has added about 9,000 U.S. workers since 2009, and has already announced plans to hire another 4,500 people.

The Fairfield, Connecticut-based company, whose operations range from making loans to mid-sized businesses to manufacturing railroad locomotives, plans to discuss these moves at the Washington meeting. Boeing Co. CEO James McNerney and Dow Chemical Co. CEO Andrew Liveris are also scheduled to speak.

GE revenue lower than expected; expects a volatile year ahead

FAIRFIELD, Conn. ― General Electric Co’s. fourth-quarter revenue fell short of Wall Street expectations because of slower-than-expected growth in Europe, sending its shares down 2.5 percent in premarket trading.

The largest U.S. conglomerate expects a volatile year but it plans to build up its emerging-market presence and restructure its European operations.

Its profit came in 1 cent per share above Wall Street’s forecasts.

“We’re concerned about the revenue miss,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York. “That’s really what we’re focused on this earnings season. We’re not so concerned about being a penny above or below expectations, because that can be handled with accounting.”

The world’s biggest maker of jet engines and electric turbines said net income from continuing operations rose 0.6 percent to $3.93 billion, or 37 cents per share, compared with $3.90 billion, or 36 cents per share, a year ago.

Factoring out one-time items, profit came to 39 cents per share, above the 38 cents analysts had forecast, according to Thomson Reuters I/B/E/S.

Total revenue came to $37.97 billion, down from $41.23 billion and below the $40.03 billion analysts had expected. Factoring out the effects of last year’s sale of a majority stake in NBC Universal revenue would have been up 4 percent.

“We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth-market footprint and taking important steps to strengthen risk management,” said CEO Jeff Immelt, in a statement. “We are restructuring our business in Europe to reflect market conditions.”

GE unit to pay $70 million over muni bid-rigging cases

WASHINGTON ― General Electric Co. acknowledged that three former traders at a finance unit engaged in bid-rigging of municipal bonds and agreed to pay $70.4 million to resolve probes into the matter.

The agreement was with GE Funding Capital Market Services, a discontinued GE business unit, and concerned actions that occurred between 1999 and 2004. It is one of five that the U.S. Securities and Exchange Commission, Justice Department and other state agencies have reached with financial institutions charged with bid-rigging.

GE, the largest U.S. conglomerate, said on Friday that it exited the business in question in April 2010 and that the three employees involved no longer work for it.

The director of the SEC’s Division of Enforcement, Robert Khuzami, said, “Our in-depth investigations have uncovered pervasive corrupt practices in the municipal securities reinvestment market, and we are requiring financial firms one by one to step up and pay the price for their misconduct.”

GE Funding Capital Market Services acknowledged that some of its traders entered agreements to manipulate the bidding process for municipal investments and related contracts, among other activities, the Justice Department and SEC said.

GE said it was “pleased” to have resolved the matter and that it had already accounted for the settlement costs in prior quarters.

Its shares were up 1 percent at $18.25 on the New York Stock Exchange.

Authorities had previously reached settlements worth more than $650 million with four other companies: Wachovia Bank, J.P. Morgan Securities, UBS Financial Services and Banc of American Securities. Eighteen people including the former GE staffers, have been indicted or pleaded guilty the SEC said.

GE, Microsoft in healthcare software joint venture

REDMOND, Wash. ― General Electric Co. and Microsoft Corp. are forming a joint venture to develop and sell software systems to make it easier for healthcare providers to store, access and share patient information.

The 50-50 venture, which is yet to be named, will initially employ about 700 people and be based near Microsoft’s headquarters here, the companies said on Thursday.

The goal is to develop open software systems that would allow multiple healthcare providers to track patients — for example, allowing a diabetic patient’s primary care physician to see how recently he or she has been to the podiatrist to check blood flow to his or her feet.

“Part of the problem in healthcare is there’s so many doctors; there’s so much information to bring together. There’s not a single place for that,” said Michael Simpson, a GE Healthcare executive who will serve as chief executive of the new venture when it begins operations next year. “When you talk about how do you bend the cost curve, it’s not about making big monolithic systems; it’s about joining systems and aggregating the data together so that people can make better decisions.”

The two companies, who would not disclose the financial terms of the deal, said they are rolling Microsoft’s Amalga, Verence and Expresso systems, as well as GE’s eHealth and Qualibria systems.

GE, whose core healthcare business is making medical-imaging devices, has been stepping up its presence in healthcare computer systems in recent years. The largest U.S. conglomerate in 2009 formed a joint venture with chipmaker Intel Corp to develop devices to allow doctors to monitor patients’ health remotely.

GE profit up 18 percent, driven by foreign markets’ growth

FAIRFIELD, Conn. ― General Electric Co. reported an 18 percent profit rise that met Wall Street’s expectations, helped by strong revenue growth in key foreign markets including Brazil, Russia and China.

The largest U.S. conglomerate said on Friday it expects earnings to rise at a double-digit percentage rate next year, following peer United Technologies Corp in trying to assuage investors’ fears about Europe’s brewing debt crisis.

“We continue to successfully navigate a volatile global economy,” Chief Executive Jeff Immelt said in a statement.

Investors took heart in the company’s 16 percent growth in industrial equipment orders — an important indicator of future revenue, and in the 25 percent rise in international sales. GE has been counting on strong demand in rapidly developing economies to offset weak U.S. and European demand.

“The revenue number was strong and the organic growth rate in industrial was strong,” said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. “Those are telling and they give us a little bit of a look into next quarter and beyond.”

But GE shares declined 1.4 percent to $16.40 in premarket trading as some raised concerns that its profit margins were weaker than expected in the quarter, with a low tax rate helping the company to meet expectations.

“Margins missed our forecast and were down year on year in the four big industrial businesses,” said Jeffrey Sprague, managing partner at Vertical Research Partners. “There is little or no operating leverage in GE’s portfolio due to low priced equipment in backlog and R&D headwinds.”

The report comes amid a wave of generally strong earnings reports from big U.S. manufacturers. Also on Friday, Honeywell International Inc reported a 45 percent profit rise. Fellow blue chips Caterpillar Inc and 3M Co will report next week.

Still, investors remain concerned whether Europe’s crisis could drag down global demand by shaking the financial system.

“Possible concerns going forward are going to be related to Europe and what impact that may have, not just there but on global growth in general,” said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan. “There’s elevated uncertainty.”

The world’s biggest maker of jet engines and electric turbines reported third-quarter earnings attributable to common shareholders of $2.34 billion, or 22 cents per share, compared with $1.98 billion, or 18 cents per share, a year earlier.

The results included an 8-cent-per-share charge to buy back the preferred shares the company had sold to Warren Buffett’s Berkshire Hathaway Inc during the financial crisis.

Buying back the Buffett stake, which carried a preferred dividend, will boost GE’s annual earnings by 3 cents per share in the coming years.

Factoring out one-time items, profit came to 31 cents per share, meeting analysts’ average forecast, according to Thomson Reuters I/B/E/S.

Revenue was little changed at $35.37 billion, above the $34.94 analysts had forecast.

GE’s weak point on profit remained its big energy infrastructure division, where earnings slipped 9 percent despite a 30 percent rise in revenue, reflecting pricing pressure on wind turbines. The company has said that business will resume profit growth next year.

“That’s bottoming out. It will start to turn up probably in the next quarter but definitely in 2012,” said Harbor’s De Gan. “It’s a margin issue. Margins have contracted because wind is just so terrible.”

Before today, GE shares had fallen about 9 percent so far this year, while the Dow Jones industrial average has declined less than 1 percent.

General Electric to “vigorously contest” mortgage lawsuit

FAIRFIELD, Conn. ― General Electric Co. said it would “vigorously contest” a lawsuit by the Federal Housing Finance Agency, which said the conglomerate’s former WMC unit made inaccurate statements about the sale of two residential mortgage-backed securities.

GE was one of 17 large banks and financial institutions sued on Friday by the FHFA, which oversees Fannie Mae and Freddie Mac, over losses on $200 billion of subprime bonds.

GE said in a statement on Wednesday that the two transactions federal regulators are questioning amounted to $549 million and that $66 million in principal remain on them.

GE sold the WMC subprime mortgage lending business in 2007.

Other big financial institutions targeted in the suit include JPMorgan Chase & Co., Royal Bank of Scotland  and Bank of America Corp., including its Countrywide and Merrill Lynch arms.