General Electric Co said profit fell by almost half, on a deeper drop in revenue than Wall Street expected, as the slump that has gripped its finance and media businesses took hold of its heavy industrial units.
The largest US conglomerate, whose shares fell 3.2% in pre-market trading, reported earnings that topped Wall Street's expectations, but posted a 17% drop in revenue that was far deeper than the 10% decline analysts expected.
Earnings tumbled at all its businesses except for the energy infrastructure unit, which makes equipment including electricity-producing turbines and gear used in oil and gas production.
GE's second quarter net income came to $2.67 billion, or 24 cents per share, compared with profit of $5.07 billion, or 51 cents per share, a year earlier.
Profit from continuing operations came to 26 cents per share. On that basis, analysts on average had looked for 24 cents.
Revenue fell 17% to $39.08 billion. Factoring out fluctuating exchange rates, revenue would have fallen 12%.
“Hitting the bottom line number was pretty good news, but that top line revenue, that's a big miss,” said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which owns GE shares. “For them to come in at the $39 (billion revenue) range, that was definitely disconcerting.”
GE's size and the scope of its operations - which range from commercial lending to building railroad locomotives to running the NBC television network - make it a bellwether of the world economy, which is facing a brutal recession.
“The numbers are far from inspiring, but in this environment that could be seen as a positive,” said Owen Ireland, analyst at ODL Securities in London.
The world's largest maker of jet engines has been dragged down by deteriorating profit at its GE Capital arm, which has been hurt by heavy investments in commercial real estate and a weaker credit environment.
The company generated $7.1 billion in cash from operations and that its backlog of orders held steady at $169 billion.
Shares declined 40 cents to $12.00 in pre-market trading.
GE shares have fallen about 24% so far this year, a much sharper decline than the 1% slide of the Dow Jones industrial average.
The Fairfield, Connecticut-based company competes with a lineup of some of the world's largest companies, including German conglomerate Siemens AG, Swiss engineering group ABB Ltd and French industrial group Alstom SA. (Reuters)