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.

The nascent strength in GE's industrial and media businesses partially offset continued weakness in its GE Capital financial arm. The company posted third-quarter earnings Friday that fell a less-than-feared 42%, although revenue was lighter than expected.

Shares were down 5.5%, or 92 cents, at $15.87 in recent trading. The stock hit an 18-year low in March, but 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, to $263 million. The results were boosted by a tax benefit.

GE executives said on a post-earnings conference call that plans to shrink GE Capital are ahead of schedule, contributing to the decline in revenue. Chief Executive Jeff Immelt reiterated that charge-offs on the finance arm will likely peak in mid-2010, though he remained cautious about real-estate losses and the effect of rising unemployment on consumer lending.

The conglomerate also noted that it is confident GE Capital will be "grandfathered" under proposed new regulations that some investors have feared could force it to split off the financial unit.

Chief Financial Officer Keith Sherin said GE is tightening ties with the unit to help head off any lingering regulatory threats. He said GE Capital's parent will extend fixed-charge covenants with the unit beyond their present three years, and make some other changes.

Immelt said GE's industrial and media businesses benefitted from an economy that "definitely improved" in the third quarter.

He cautioned that a broad rebound likely will be gradual, but called the second quarter "potentially the low-spot" for new orders. He forecast sequential order growth in the fourth quarter amid "signs of life" in the economy.

GE's industrial and media businesses, including its 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 8.5% in the second quarter.

The conglomerate's $174 billion backlog of orders for big-ticket equipment, maintenance and other services was up 3% in the third quarter after slipping a bit in the second quarter.

GE generated $18.4 billion in new infrastructure orders in the quarter, evenly split between equipment and services, up from about $18 billion in the second quarter.

Immelt said the backlog "should give our investors some comfort in terms of visibility into the future."

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 off 30% at $12.16 billion.

A survey of analysts by Thomson Reuters predicted a profit of 20 cents a share on revenue of $39.5 billion.

Immelt declined to comment extensively on GE's plans for NBC Universal. He previously confirmed that talks are under way to merge NBC Universal with Comcast Corp.'s (CMCSA) television networks.

He noted Friday that GE has "always evaluated our portfolio," saying "this year we just wanted to be ready for several scenarios."

Vivendi SA (VIV.FR) owns a 20% stake in NBC Universal and has an option to sell it every year between mid-November and early-December until 2016.

Meanwhile, GE executives reiterated that GE Capital may need an infusion of $2 billion to $7 billion in 2011, although they said it won't need to seek outside capital for the funds.

GE said overall delinquency rates in its consumer-loan portfolio appear to have "leveled off" in the third quarter at 4.78%, up from 2.74% a year ago. Delinquencies in its commercial real-estate portfolio have climbed to 4.19%, up from 0.62% a year ago.

Sherin said the company has pre-funded about 90% of GE Capital's long-term debt funding target of $35 billion to $40 billion for 2010.

-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com