GE profit falls 6%, to relief of investors

HARTFORD, CONN. —  General Electric Co. reverted to form with no big surprises in its latest earnings report, and investors shocked by an unexpected profit shortfall three months ago showed their appreciation.

Even though earnings fell in the latest quarter, investors helped GE shares hold their ground Friday.

The conglomerate, whose varied interests include making loans, TV shows, light bulbs and industrial machinery, reported a 6% decline in its second-quarter earnings but still matched analyst expectations.

GE’s share price edged up 2 cents to $27.66 even as the Dow Jones industrials lost more than 100 points and briefly slid below 11,000 for the first time in two years.

“Overall, I think people are getting to be less fearful about the perceived risks versus the actual risks of GE’s portfolio, or how they run the business,” said analyst Nicholas Heymann of Sterne Agee. “At the margin, things are better than people expected or worried would not be performing well. I think people are having a bit of relief.”

That was a big change from April 11, when the normally reliable GE shocked investors with a 6% decline in first-quarter earnings without preparing them for it. Its shares dropped 10% that day and led the overall market lower.

GE blamed disruptions in its financial business late in the first quarter for its inability to advise Wall Street about the deterioration in its earnings.

Also Friday, GE announced it agreed to sell its Japanese consumer finance unit, which includes the Lake personal loan business, credit cards and mortgages under GE Consumer Finance Co. and its subsidiaries, to Shinsei Bank, a mid-size Japanese institution. The sale is expected to close in the next quarter.

Fairfield, Conn.-based GE earned $5.07 billion, or 51 cents a share, compared with a year-earlier profit of $5.38 billion, or 52 cents. Revenue rose 11% to $46.89 billion from $42.38 billion a year earlier.

On the basis of continuing operations, GE earned $5.39 billion, or 54 cents a share. Analysts expected the company to report earnings of 54 cents a share on revenue of $45.31 billion, according to Thomson Financial.

“No news is good news today,” said analyst Matt Collins at Edward Jones in St. Louis. “I think investors were braced for the worst.”

GE reaffirmed its full-year guidance of $2.20 to $2.30 a share, which is flat to an increase of 5%. Analysts surveyed by Thomson Financial expect full-year earnings of $2.22.

GE officials on Friday highlighted a 7% gain in revenue and 1% rise in profit for NBC Universal. Chief Financial Officer Keith Sherin cited the success of NBC shows such as “The Office” and “House,” with strength particularly in cable TV. GE also expects about $1 billion in advertising for NBC’s coverage of the Summer Olympics in Beijing, which begins next month.

GE Chief Executive Jeffrey Immelt has made it clear that NBC is not for sale, despite some analysts’ calls for such a move.