GE Chalks Up a Record-Profit Quarter
General Electric Co. said its earnings rose 15% in the second quarter to a record $2.82 billion, or 85 cents a share, a penny higher than analyst expectations. The gain was led by strong performances in its aircraft engines, power systems and financial services units.
GE, the nation’s second-largest company by market value, said revenue grew 9.3% to $27.4 billion.
Chairman Jack Welch said the conglomerate, which also owns NBC, is on track to deliver record results for the year. “The record results for the second quarter once again demonstrate the ability of GE’s diverse mix of leading global businesses to deliver top-line growth, increased margins and strong cash generation,” Welch said.
Operating profit at GE’s financial unit GE Capital, the world’s largest non-bank finance company, rose 17%, with revenue up 13%, as the company continued to expand through acquisitions in Asia, particularly Japan.
The power systems division, one of the world’s top providers of power generation equipment and services, saw profit rise 34% to $499 million on a 7% increase in revenue to $2.3 billion amid a booming U.S. energy market and utility deregulation.
Profit in the aircraft engines division rose 20% to $512 million as the unit won more than 50% of the world’s engine orders for airline passenger jets. Revenue edged up less than 1% to $2.6 billion.
NBC’s operating profit rose 15% to $544 million as the TV network had strong ratings during the key May sweeps period. Revenue was up 9% to $1.78 billion.
Profit fell 11% to $177 million in the appliance division, despite a 2% rise in revenue to $1.48 billion, as tighter competition resulted in lower selling prices, GE said.
GE’s earnings got a boost from sales of long-term service contracts, which help wring more profit from lower-margin industrial products. A productivity push at GE also has kept costs from rising as much as sales.
Stock in GE, a Dow industrials component, closed down 94 cents at $117 on the New York Stock Exchange as traders took profits after bidding the share price up in recent days in anticipation of the earnings report. The stock hit a record $118.75 Wednesday.
“It was probably one of the worst-kept secrets around,” said Tom Mahowald, an analyst at American Express Financial Advisors, which owned 18.2 million GE shares at the end of March. “That’s what prevents the shares rising today. It was a great quarter.”
At a Glance
Other earnings, excluding one-time gains and charges unless noted:
* Biogen Inc., one of the world’s biggest biotech companies, said second-quarter profit from operations rose 70% to $53.63 million, or 34 cents a share, beating estimates by 2 cents. Revenue soared 47% to $188.9 million, with a big boost from surging sales of its Avonex drug, the best-selling multiple-sclerosis treatment.
* King World Productions Inc. said fiscal third-quarter profit rose 15% to $39.4 million, or 53 cents a share, matching estimates, as revenue rose 15% to $192.7 million. The Los Angeles-based TV distributor said the revamped “Hollywood Squares” and “Roseanne” helped offset the cancellation of “American Journal” and lower revenue from newsmagazine “Inside Edition.”
King World, which has agreed to be acquired by CBS, said it expects the deal to be completed in August.
* Marriott International Inc., the largest U.S. hotel operator, said profit rose 13% in its fiscal second quarter to $114 million, or 42 cents a share, matching estimates. Revenue rose 6% to $2.04 billion from $1.93 billion. The company opened 215 hotels and resorts with 31,400 rooms in the last year, boosting its revenue from franchise and management contracts. That allowed it to meet earnings estimates, even though it increased room prices and hotel occupancy less than expected.
* National Discount Brokers Group Inc., the 10th-biggest Internet broker, said its fiscal fourth-quarter profit from operations more than tripled to $6.7 million, or 47 cents a share, from $2 million, or 14 cents, as customer trades jumped 55%. Revenue from continuing operations soared 78% to $66.9 million. Customers made an average of about 10,000 commission trades daily in the period, peaking at 16,273 on April 19. A year earlier, the daily average was less than 7,000.
* Safeway Inc. said its earnings rose 22% in the fiscal second quarter to $236.4 million, or 46 cents a share, on higher sales from acquisitions and continued cost reductions. The nation’s second-largest supermarket chain was expected to earn 44 cents, the average estimate of analysts surveyed by First Call Corp. Sales jumped 14% to $6.34 billion, helped largely by sales from Dominick’s Supermarkets Inc., which Safeway bought for $1.85 billion in November. Sales in stores open at least a year rose 1.5%. A spokeswoman for the Pleasanton, Calif.-based company said it saved considerably on costs by getting better prices on goods, in part because it ordered more due to acquisitions, and increasing the amount of profitable private-label goods that it sells.
