GE Earnings Edge Past Estimates, Revenue Falls

GE earnings drop 19%, but top estimates
GE earnings drop 19%, but top estimates

Conglomerate General Electric (GE) reported first quarter earnings Friday, beating analysts' estimates.

The corporate titan, which has been seeking to stabilize its five business lines and show growth in its capital services area, reported net profits of $1.9 billion, or 17 cents per share in the quarter that just ended, a decline from 26 cents per share a year ago.

Analysts were expecting the company to earn 16 cents a share and revenue of $37.1 billion, according to Thomson Reuters.

GE's revenue fell to $36.6 billion in the quarter, down 5% from the previous year.

"We are very encouraged by GE Capital's performance, earning $0.6 billion in the quarter," Jeffrey Immelt, CEO, said in a statement. "We are seeing solid signs of stabilization. Losses, delinquencies and non-earning assets (excluding the impact of FAS 167) declined in the quarter. At the same time, reserve coverage increased." Immelt also said the company is "originating new business at attractive margins and our funding costs have declined. GE Capital losses seem to have peaked. Commercial real estate continues to be challenging, but the risks are understood and we expect them to be manageable. We have strengthened the GE Capital franchise and are on track for solid earnings growth."

GE Capital Finance, its struggling lending arm, was one of three business segments that posted a drop in profits or revenues. Revenue fell 10% to $12.3 billion, while its income fell 41% to $607 million. The company's energy infrastructure business generated nearly $8.7 billion in revenues, a 5% drop from the previous year. But that segment grew profits by 12% to $1.48 billion, compared with the previous year. Revenues for this segment came in weaker than some on the street had expected, but its profits were far more impressive than expectations.

Technology infrastructure was hit with a double whammy of both declining revenues and profits. Revenues fell 9% to $8.66 billion and profits tumbled 18% to $1.4 billion, compared with last year. This segment fell short in both regards compared to one analyst's expectations.

The company's NBC Universal business performed better than expected on the revenue generation side, thanks to the Olympics, but its profits took a hit. Revenues were up 23 percent to $4.3 billion, but profits were beaten down with a 49% decline to $199 million.

Meanwhile, GE's Home & Business Solutions business posted a meager 1% increase in revenues to $1.94 billion and a 58 percent profits gain to $71 million. While revenues were in line with expectations, its profit gain was short.

"GE's environment continued to improve in the first quarter of 2010," Immelt said. "We saw encouraging economic signs, including increases in airline passenger miles and freight loadings, declines in receivables delinquencies, and growth in local advertising markets. Total company backlog of equipment and services held steady from the prior quarter at $174 billion. Our Healthcare and Oil & Gas businesses experienced solid orders growth and our equipment and services backlog remains strong."

GE shares declined more than 3% in early trading.