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NEW YORK (MarketWatch) -- General Electric Co. said Friday profit fell 47% in the second quarter, as the industrial giant navigated through a tougher economic environment with fewer sales and more credit defaults in its financial business.
For the June quarter, the Fairfield, Conn., conglomerate and Dow Jones Industrial Average components said profit was $2.67 billion, or 24 cents a share, compared to $5.07 billion, or 51 cents, earned in the year-earlier period.
On a continuing-operations basis, earnings in the latest period were 26 cents a share, while analysts polled by FactSet Research were expecting earnings of 24 cents a share, on average.
Analyst earnings typically exclude discontinued operations.
GE /quotes/comstock/13*!ge/quotes/nls/ge (GE 11.74, -0.66, -5.32%) builds jet engines, locomotives and water treatment plants, as well as provides financial backing, health-care products and entertainment, including NBC.
Revenue for the company fell to $39.08 billion from $46.84 billion in the 2008 second quarter. Wall Street was looking for sales of $41.7 billion.
"We are executing through the recession by aggressively controlling costs and driving working capital improvements while continuing to invest for future growth," said Jeff Immelt, chairman and chief executive, in a statement.
Since hitting an 18-year low in March at $5.73, shares of the company's common stock has rebounded more than 80%, but they remain historically low compared to the past 10 years.
More recently the stock was off 5% to $11.75 in premarket trading.
GE investors have a slew of anxieties, including the decline in the company's aviation and health-care markets as well as the impact of credit defaults on the company's financial arm, GE Capital.
GE Capital Services' quarterly profit fell 80% to $590 million with revenue down 29% to $13.4 billion.
GE has said it expects GE Capital to post a profit for the year, helped by tax breaks due to losses.
Industrial profit, which includes NBC Universal, fell about 9% to $4.3 billion with sales off 7% at $26 billion.
The company has seen a decline in overall orders due to the recession, though it hopes business growing out of the government stimulus efforts will reverse that trend later this year.
"While we have only realized limited revenue to date, we believe that activity will increase in the second half of 2009," Immelt said.
Total company backlog of equipment and services held steady at $169 billion.
Cash generated from operating activities totaled $7.1 billion, down from $9.3 billion last year, but ahead of its 2009 target, the company said.
GE profits fall 49 pct, revenues miss
General Electric Co.'s second-quarter profit tumbled 49 percent as the recession continued to hurt its finance unit and lowered sales across its wide range of industrial businesses.
The conglomerate's earnings edged past Wall Street expectations and GE said its big capital lending unit is on track to post a profit this year. But revenue came up short and GE shares fell more than 6 percent in morning trading.
Investors are combing corporate earnings for clues on the direction of the nation's moribund economy and GE, which lends money and makes products ranging from microwaves to wind turbines, is considered a barometer of its health. The company's results suggest the recession is still sapping demand for goods.
GE reported net income was $2.6 billion, or 24 cents per share, after paying preferred dividends. That compared with $5.1 billion, or 51 cents per share, a year earlier.
Revenue fell 17 percent to $39.1 billion.
Analysts polled by Thomson Reuters expected the Fairfield, Conn.-based company to earn 23 cents per share on revenue of $42.16 billion.
GE Capital, which lends money on everything from credit cards to commercial real estate, posted a modest profit of $590 million. But those results were still 80 percent lower than a year ago, further proof of GE Capital's struggles with mounting losses on its bad loans during the financial crisis.
Still, GE Capital "remains on track to be profitable for the full year," Jeff Immelt, GE's chief executive, said.
GE is in the process of shrinking GE Capital and reducing its reliance on riskier debt like commercial paper. But its earnings show that the unit continues to face serious challenges. For example, GE's real estate unit, which owns office buildings and makes loans for commercial properties, posted a $237 million loss compared with $484 million in profits a year earlier.
GE's industrial units have also suffered. GE said its second-quarter sales fell 7 percent to $26 billion, a decline led by home appliances, train locomotives and diagnostic equipment for hospitals.
The conglomerate's NBC Universal entertainment division, which includes the NBC television networks, saw profits fall 41 percent on weak television advertising.
The only unit to post higher profits was GE's energy infrastructure segment, which makes products like pipeline equipment and wind turbines. GE said the 13 percent increase there was due to pricing and cost moves.
The first half of 2009 has been a difficult one for GE, one of the world's largest companies. It cut its dividend sharply to preserve cash, lost its vaunted Triple-A credit rating because of GE Capital's problems, and saw its share price plummet on fears that things could get worse for its lending unit.
Despite GE's problems, company officials say there have been some signs of stability recently. GE has already met its goal of raising $45 billion from debt sales this year and pre-funded a third of its planned debt issuance for next year. That's an indication that credit markets may be regaining some of their vigor. GE's share prices have also recovered.
The company has been fending off speculation about the impact of President Barack Obama's financial sector reform proposal. The proposals could give regulators more sway over GE Capital and potentially GE as a whole. That could force GE to spin off GE Capital, though GE has said it remains committed to the finance unit.
GE plans to give a detailed review of GE Capital later this month, the second time this year it will open its books as it tries to convince investors that there are no big losses lurking.
Its shares fell 75 cents, or 6.1 percent, to $11.65 in morning trading Friday.
