BOSTON: General Electric Co posted quarterly earnings that topped Wall Street expectations as it kept costs in line despite sluggish demand for jet engines, railroad locomotives and other heavy equipment.
The results, reported yesterday showed the largest US conglomerate's efforts to stabilise itself after two brutal years seemed to be paying off, investors said. Shares rose 3.25 per cent.
Profit fell 19pc from a year earlier, GE's eighth straight quarter of revenue decline, but chief executive Jeff Immelt said the company is on track for flat earnings this year.
"They exceeded expectations on both the top line and the bottom line, which is a positive," said Perry Adams, senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan.
"Orders came in strong, grew sequentially from third quarter and the backlog improved slightly from the third quarter."
Fourth-quarter profit attributable to common shareholders fell to $2.94 billion, or 28 cents per share, from $3.65bn, or 35 cents a year earlier.
Analysts on average expected profit of 26 cents per share.
Revenue fell 10pc to $41.44bn. Wall Street had looked for $40.02bn.
Immelt called the company's 2010 financial "framework," which calls for earnings to be about equal to 2009 results, "quite achievable." The company posted a 2009 profit of $1.03 per share from continuing operations.
Analysts' average forecast for 2010 is 94 cents per share on sales of $152.77bn.
"We're positioned for growth in 2011 and beyond," Immelt told investors on a conference call.
The world's biggest maker of jet engines and electricity-producing turbines has been hit hard by the worst economic downturn since the Great Depression and is working to scale back its hefty GE Capital finance arm, which has invested heavily in commercial real estate.
Profit fell 67pc at GE Capital, though Immelt said every segment of that business, except its commercial real estate arm, made money.
"Everything except commercial real estate seems to be doing a little bit better," said Thomas Villalta, portfolio manager at Jones Villalta Opportunity Fund, Austin, Texas, which holds GE shares.
"Commercial real estate always seems to be a question mark for them."
This will be a year of significant portfolio changes for GE, which reached an agreement last month to sell a majority stake in its NBC Universal media business to top US cable operator Comcast Corp.
GE officials expect that deal, which needs regulatory approval, to close late this year.
GE expects to end the year with about $25bn in cash, which it will consider applying to share buybacks or to raising dividend. It last year cut dividend by 68pc.
The company could be affected by President Barack Obama's proposed tax on Wall Street banks to reimburse US taxpayers for a federal bailout of the financial system.
GE, which took part in the Temporary Liquidity Guarantee Programme, could be on the hook for about $500 million if the proposed tax takes effect, chief financial officer Keith Sherin said.
Shares of the company, based in Fairfield, Connecticut, shares have risen 28pc over the past year, trailing the 33pc rise of the Dow Jones industrial average.
