GE Expects Solid Profit, More Honeywell Savings

General Electric Co. President Jeffrey Immelt brought good news to Wall Street on Wednesday, predicting that 2001 profit will be at the upper end of the company’s projected range and saying GE is likely to save more from the planned purchase of Honeywell International Inc. than forecast.

Immelt, also chairman-elect, said General Electric (ticker symbol: GE), the biggest U.S. company by market value, will have profit “solidly above” $1.45 a share. The company initially forecast earnings of $1.40 to $1.50.

The average estimate of analysts polled by First Call/Thomson Financial projects profit of $1.47 a share.

Customers that need long lead times for orders and gains in adding multiyear service contracts have kept GE’s profit rising, while earnings have declined at the company’s more economically sensitive businesses.

GE’s diversity, its reliable service revenue and savings from computerization have helped shield the company from the slowing U.S. economy, analysts say.

“The second quarter was starting out rough for a lot of industrial-related names,” said Thomas Mahowald, an analyst at American Express Financial Advisors, which owns about 50 million GE shares. “This should give a little comfort.”

Yet GE’s stock didn’t move much Wednesday: It traded as high as $50.40, then closed off 5 cents at $49.43 on the New York Stock Exchange.

Still, GE shares are up 3.1% this year, while the blue-chip Standard & Poor’s 500 index is down 4.9%.

Order backlogs for equipment and service contracts totaled $47 billion in April, GE said last month, up from about $44 billion in March. That is helping offset weaker sales at GE’s economically sensitive units, such as plastics, appliances and lighting.

Immelt also gave details about the planned Honeywell acquisition. GE will merge Honeywell’s products and services in aerospace, industrial controls, chemicals and power systems with GE’s own units in those areas.

The company expects to save more than $3 billion by combining businesses, more than twice GE’s initial forecast when the transaction was announced in October.

The deal has been tentatively approved by the Justice Department and is being reviewed by European regulators.

GE said Tuesday that it had received the European Commission’s statement of objections to the combination as part of its review.

Immelt told Wall Street analysts at a Florida investment conference that there are no surprises in the statement, they said.

By law, European regulators must decide whether to approve the transaction by July 12.

GE’s main businesses include GE Capital, the world’s largest non-bank finance company, and the NBC television network.

The Fairfield, Conn.-based company also is the biggest maker of aircraft engines, medical diagnostic imaging machines and turbines for power plants.