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GE Profit Climbs on Energy, Infrastructure

CNBC.com
Friday, 18 Jan 2008 | 8:01 AM ET
GE
GE

General Electricreported Friday a 4 percent increase in fourth-quarter profit, in line with Wall Street's expectations, led by performance in its infrastructure and energy business and also guided first-quarter earnings to a range in line with the current consensus estimates.

Net income rose to $6.7 billion, or 66 cents a share, from $6.44 billion, or 62 cents a share in year-ago period.

Excluding discontinued operations, earnings from continuing operations rose to 68 cents a share from 58 cents. The company had predicted earnings from continuing operations of 67 cents to 69 cents a share.

Revenue rose 18 percent from the year-ago quarter to $48.6 billion, with more than half of it coming from outside the U.S.

The results outpaced average analyst estimates according to Thomson Financial. Those called for earnings of 68 cents a share on revenue of $47.28 billion.

For the first quarter, GE predicted a profit of 50 cents to 53 cents a share compared with expectations of 51 cents a share. For the year, it confirmed its profit forecast remains at "at least" $2.42 per share.

For the year, it confirmed its profit forecast remains at "at least" $2.42 per share.

"This is great. This is exactly where you want to be, if you think about people investing in big, beefy conglomerates," Kevin Ferry, chief market strategist at Cronus Futures Management, told CNBC's "Squawk Box."

"Certainly in a shaky world this is a standout performance," Ferry added.

"We have built the company to outperform in this environment," GE Chairman and CEO Jeff Immelt said in a statement. "We are also more global, with more than 50 percent of our revenues now coming from outside the U.S."

The Mothership Reports
A look at GE's earnings report, with Jack De Gan, Harbor Advisory; Mike Holland, Holland & Co. and CNBC's Carl Quintanilla

Growth at the second-largest U.S. company by market capitalization behind Exxon Mobil has been driven by continued investment in infrastructure equipment abroad, particularly in the fast-growing economies of China and India and the Middle East. Its NBC Universal media unit, which had struggled for several years, has also picked up.

Financial services performed well despite the volatile markets, with GE Money's earnings rising 7 percent due to its global performance, which offset hardships in the U.S. market.

Asked by if he found anything disappointing in GE's results, Mike Holland, from Mike Holland & Co., a long-time General Electric shareholder, said: "No And that's a pretty remarkable call by itself for … a company that's exposed to the financial sector as it is. GE Money has done very well."

In slides tied to its earnings conference call, GE said it expects first-quarter earnings to rise at five of its six units. The exception is GE Money, where profits may fall 20 percent.

The largest unit, infrastructure, is expected to see earnings rise 15 percent to 20 percent. GE expects industrial and NBC Universal profits up 5 percent to 10 percent, with commercial finance and health-care profit up 5 percent, the company said the slides.

GE also said in a filing with the U.S. Securities and Exchange Commission that an internal review of how its aviation unit accounted for profits found some errors that resulted in it lowering its 2002 net profit by $585 million and raising profit in the following four years.

GE shares were trading 2.2 percent higher in pre-market trade.

Shares of GE closed 2007 essentially flat. Following Thursday's sharp sell off in U.S. equities, GE shares are down more than 10 percent so far this year, deeper than the 8 percent drop in the blue-chip Dow Jones industrial average and the 9 percent slide of the broad Standard & Poor's 500 index.

GE is the parent company of CNBC and CNBC.com.

-- Reuters contributed to this report

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