On the surface, this morning's GE non-GAAP results (defined as follows: "Non-GAAP results excluding acquired Alstom businesses, non-operating pension costs, gains and restructuring & other charges") were spun as very bullish, with extensively adjusted revenues of $33.5 billion rising 15% and beating expectations of $31.4 billion, while non-GAAP EPS surged 65% to $0.51, well above the $0.46 expected.

Bloomberg immediately praised the result:

General Electric Co. reported second-quarter profit that beat analysts’ estimates as surging sales in energy units helped the industrial giant counter the impact of a sluggish economy. Adjusted earnings rose to 51 cents a share, boosted by higher profits in the power and renewable energy divisions, GE said in a statement Friday. That exceeded the 46-cent average of analysts’ estimates compiled by Bloomberg. Sales of $33.3 billion compared with $31.9 billion expected by analysts. “The diversity and scale of our portfolio enabled the company to perform well despite a volatile and slow-growth economy,” Chief Executive Officer Jeffrey Immelt said in the statement. “We expect strong organic growth in the second half of the year.”

What was less, if at all, noted is that any comparisons to prior periods were apples to oranges, as the entire upside contribution came not only from transaction "gains", which added $3.1 billion to the top line, and restructuring charges but all the inclusion of the recently acquired Alstom.

Read the following as you keep the following assessment from Bloomberg in mind:

"GE is betting on markets such as energy and aviation to help it overcome economic malaise and global uncertainty highlighted by the U.K. vote to leave the European Union. Immelt has sold finance and consumer-focused operations while investing in equipment manufacturing and building a complementary software business."

So for those curious how the increasingly industrial firm's organic operations, and especially the abovementioned energy "and avation" held up in the quarter when excluding the contributions from M&A, GE pointed out that excluding Alstom; organic orders - those attributable solely to GE's core ops - crashed by -16% organic while industrial operating margins went nowhere, and stayed flat. Even including Alstom, overall orders declined by 2% from $27.1 billion to $26.6 billion, driven by a plunge in equipment orders from $14.5 to $12.9 billion, hinting just how troubled the global manufacturing sector remains.

But the real surprise was in GE's core-core operations, whose breakdown we had to dig deep inside the presentation to find. It was, in a word, a disaster. Here is the breakdown:

Organic equipment, driven by market pressure in oil-and-gas and transportation, plunged 30%.

Power tumbled 27%

And perhaps most disturbing was Aviation, despite strong prior results, crashed 37%

And that, in a nutshell, is how a company whose core lines of business are getting crushed, not only reported a 65% surge in "earnings", but crushed expectations.

Source: GE