(Updates throughout with additional details and background.)
By Bob Sechler
DOW JONES NEWSWIRES
General Electric Co.'s (GE) industrial businesses showed signs
of shaking off the recession's grip in the third quarter, with the
bellwether conglomerate growing its backlog of equipment and
services orders to a record $174 billion.
Strength in GE's industrial and media businesses offset
continued weakness in its GE Capital financial arm. The company
posted third-quarter earnings that fell a less-than-feared 42%,
although revenue was lighter than expected.
Shares were down 0.8% at $16.65 premarket. After hitting an
18-year low in March, the stock was up 4% for the year through
Thursday.
GE Capital, which was hit hard by the financial crisis and has
sapped results for about the past two years, posted an 87% drop in
quarterly profit.
But GE's industrial and media businesses, including it energy
and technology infrastructure divisions and its NBC Universal media
unit, posted a combined 4% rise in third-quarter profit, compared
with the year-earlier period. Profit at the units had slumped 8% in
the second quarter on a year-over-year basis.
"In a global economic environment that is beginning to slowly
recover, GE delivered solid third-quarter business results," Chief
Executive Jeff Immelt said in a statement. "We are aggressively
controlling costs, increasing our industrial backlog while
expanding margins and capitalizing on strong services
performance."
The conglomerate's $174 billion backlog of orders for big-ticket
equipment, maintenance and other services was up 3% in the third
quarter after slumping a bit in the second quarter.
GE generated $18.4 billion in new infrastructure orders in the
quarter, evenly split between equipment and services, and the
company noted that "cancellations remain insignificant."
The industrial operations generated $4.4 billion in cash during
the quarter, putting total cash generation at $11.5 billion so far
this year and on pace to exceed $15 billion. Cash generation has
been an important metric for the company as it attempts to allay
investor fears regarding its GE Capital financial unit.
Overall, GE posted a third-quarter profit of $2.49 billion, or
23 cents a share, down from $4.31 billion, or 43 cents a share, a
year earlier. Restructuring and other items totaled $600 million,
or 5 cents a share.
Revenue decreased 20% to $37.8 billion, with revenue at GE
Capital dropping 30%.
A survey of analysts by Thomson Reuters predicted a profit of 20
cents a share on revenue of $39.5 billion.
GE's operations comprise a wide range of products including
appliances, aviation products, health-care products and its NBC
Universal television unit, making its performance an indicator of
broader economic trends.
GE didn't immediately comment on its plans for NBC Universal,
although the company was scheduled to conduct a post-earnings
conference call with analysts later Friday morning. GE previously
has confirmed that talks are under way to merge NBC Universal with
Comcast Corp.'s (CMCSA) television networks.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285;
bob.sechler@dowjones.com
(Joan E. Solsman contributed to this report.)
