GE posts a 2% rise in earnings
General Electric Co., helped by sales of big-ticket items such as jet engines and railroad locomotives, posted first-quarter earnings of $4.5 billion Friday, up 2% from the same period in 2006.
The diversified manufacturing, media and financial services conglomerate also said the results were dogged by the sagging sub-prime mortgage industry and weak performances in its industrial and NBC units.
“It was a solid first quarter despite a few headwinds,” said Jeffrey R. Immelt, GE’s chairman and chief executive.
Per-share earnings of 44 cents were in line with estimates by analysts polled by Thomson Financial.
Revenue of $40.2 billion for the quarter was up by 6% from the same period last year.
“Overall, it was an encouraging quarter,” said Matt Collins, an analyst at Edward Jones. “It reinforced a positive outlook for the company.”
The company’s first-quarter performance was led by its infrastructure business, which rose about 18% in the first quarter to $11.9 billion this year. Profit at the unit, which makes engines, turbines, locomotives and other heavy equipment, was nearly $2.2 billion, up from $1.7 billion in the first quarter of 2006.
Mike McGarr, an analyst at Becker Capital Management in Portland, Ore., said infrastructure was gaining an increasingly large share of GE’s overall business and would account for more after the expected divestiture of the plastics business later this year. A Saudi firm reportedly is putting together a bid of as much as $12 billion for GE’s plastics division, which has struggled since 2004.
“That’s a global business and if the U.S. is in a moderating mode, that business will carry the day,” McGarr said.
In addition, Collins said, a major equipment backlog of $37 billion that was reported by GE on Friday bodes well for the company’s future.
However, revenue at the industrial unit of Fairfield, Conn.-based GE fell from $8.1 billion in the first quarter of 2006 to $7.4 billion in this year’s first quarter. It was hurt by the plastics business, which in turn was affected by rising costs of benzene, a key component of plastics.
NBC’s broadcast network tumbled from first to fourth place in ratings over the last few years, but has shown signs of life with critical successes recently. It remains atop the ratings in morning and evening news and in late-night entertainment.
In February, Immelt named NBC chief Jeff Zucker as president and CEO of NBC Universal, placing him in charge of a stable of networks including USA, CNBC, MSNBC, Bravo, Sci Fi and Telemundo.
The company also owns the Universal Studios theme parks in Universal City and Orlando, Fla.
Keith Sherin, chief financial officer, told investor analysts that NBC also suffered in comparison with its performance last year when it benefited from the summer Olympics and DVD sales of “King Kong.”
Profit at GE Money, which includes mortgage lending in the sub-prime market, rose by less than 2%, to $851 million during the quarter.
GE said it expected second-quarter per-share earnings of 52 cents to 54 cents and reaffirmed its previous guidance for per-share earnings for the year at $2.18 to $2.23.
Shares of GE rose 20 cents Friday to $35.38.
