Talk about a surprise return to form. Another year, another successful acquisition by a reunited General Electric (GE) and after a disappointing 2017, the US industrial conglomerate has reported a surge in profits and a good fourth quarter.
Moreover, GE’s pending acquisition of the Baker Hughes business of General Electric is also off to a flying start. Orders jumped 83% in the fourth quarter and revenue improved to $31.4bn, swinging to a profit of $2.2bn. Sales rose 6% to $98.2bn and net income was $1.9bn, up from $1.6bn. These are signs that GM’s investment in Baker Hughes is starting to pay off.
For the fourth time in two years, UK consumer confidence fell last month amid fears of higher inflation, though its long-term trend remains positive. Confidence was lower than in November and December but it is up 2.4% from a year ago. While the Brexit factor is partly to blame, more consumers reported that they planned to spend more on the summer holidays than on winter clothes.
IBM is facing criticism over the £2.2bn a year it spends on research and development, many of it for its slow-growing legacy hardware businesses, which haven’t been generating profits. This is despite the changes it has announced since 2006 under which it has ditched low-margin businesses and cashed in on its successful cloud computing initiative.
Here’s a big whack of good news, though. IBM’s equipment sales rose 12% to $4.9bn in the last quarter of 2017.
– New, buoyant tech sectors are the star performers so far this year, after an underwhelming 2017 and more cautious last year than usual. The S&P 500 technology index has risen 6.7% in the first two weeks of 2018, by far the best performance of the major US stock market indices.
– Shares in software maker Equinix shot up 16% to $759.34 after it reported record revenues and profit. Stock in Taiwan Semiconductor Manufacturing rose 14% after it said it beat its own smartphone chip sales target for the fourth quarter.
– European banks, still soured by legacy loans, are moving quickly to pare back their balance sheets. The European Banking Authority has published a comprehensive analysis of 859 banks that shows that banks across the continent are reducing their balance sheets by €2.8 trillion since 2010.
– US President Donald Trump is calling on US banks to boost lending. JPMorgan Chase chief executive Jamie Dimon has already said the best thing the Trump administration could do is fix the tax law and put out regulations. He’s right, and it should encourage banks to focus on loan growth – not federal or state regulations.