GE Net Income Rises 16%; GM Profit Falls 34%

General Electric Co., the conglomerate with businesses ranging from lightbulbs to jet engines to broadcasting, said its fourth-quarter profit rose 16%, slightly better than expected, driven by sales of higher-margin service contracts at industrial businesses and of advertising on NBC.

Fellow blue chip General Motors Corp. said its fourth-quarter profit dropped a less-than-expected 34% from a year ago, when it was running its assembly plants at full bore to make up for production lost to strikes. GM benefited as U.S. consumers bought 16.96 million cars and light trucks in 1999, an industry record.

GE said its net income for the October-December period climbed to $3.09 billion, or 93 cents a share, from $2.67 billion, or 80 cents, for the year-ago period. Revenue rose 15% to $32.9 billion, surpassing the 10% to 12% rise analysts had expected, as GE gained market share in existing businesses and through acquisitions.

The Fairfield, Conn.-based company is boosting its margins by doing business over the Internet and by selling more service contracts.

Operating profit for the power- systems unit rose 17% on a 28% sales rise; jet-engine unit profit rose 14% as sales rose 2%; and profit for the NBC television network rose 16% as ad sales climbed 31%.

General Electric shares fell $2.80 to close at $145.94 in New York Stock Exchange trading.

The decline may have stemmed from confusion about a gain GE took at NBC that was offset by a charge in industrial businesses, analysts said. Some investors may not have immediately understood that the gain was offset, prompting them to mistakenly think GE used the gain to achieve the 93 cents in per-share earnings, which was 1 cent above analysts’ average estimate of 92 cents.

The only GE division to report a decrease in profit was appliances.

At General Motors, fourth-quarter profit from operations slid to $1.26 billion, or $1.95 a share, from $1.91 billion, or $2.82, a year earlier.

According to First Call/Thomson Financial, analysts’ average estimate was $1.81 a share. Revenue rose 3.7% to $46.3 billion.

GM’s Latin America unit rebounded from a year-earlier loss, and cost cuts helped make up for price discounts and lower profits for its European operations.

Profit grew 23% in GM’s consumer finance unit.

The company’s Hughes Electronics Corp. unit on Wednesday reported a fourth-quarter loss from operations of $226.7 million, or 58 cents a share; it had a profit of $128.2 million, or 32 cents, for the like period of 1998.

GM faced a tough comparison to the ’98 quarter, when it was racing to recover from union walkouts that ended in August ’98. The higher output meant higher profits because auto makers record sales as cars leave the factories, not dealers’ lots.

GM shares closed unchanged at $81.50 on the New York Stock Exchange.