Immelt: Earnings Miss a 'Bump in the Road'

General Electric's earnings miss was a "bump in the road" that will be overcome as the industrial bellwether sheds poor-performing businesses and the economy improves, CEO Jeff Immelt said on CNBC.

Immelt said the company's financial services unit was caught off guard by the demise of investment bank giant Bear Stearns and was hampered by the poor performance of the broader financial sector. GE is the parent company of CNBC.com.

"It's very hard to plan for that," Immelt said. "We hate disappointing investors. I can't put a finer edge on that. It's not what we're about, it's not what we've ever been about."

Immelt said the company was particularly hard-hit by poor performance in its health care and financial services businesses and to a lesser extent by a slowdown in appliances.

GE reported an unexpected 6 percent drop in profit, as the slumping economy and credit crunch drove down profits at its financial, industrial and healthcare units.

But Immelt expressed confidence in the company's future and said investors should feel secure with the Dow component. Heading into Friday trading shares were down less than 1 percent on the year.

"We're going to continue to buy stock," he said. "We believe in the company. We think strategically the company is in very good shape."

The big news in the financial sector in March was the downfall of Bear Stearns , which faced a crisis in confidence from investors that could have sent the company into bankruptcy. Only a last-minute buyout plan hatched between JPMorgan Chase and the Federal Reserve saved the company's assets.

Immelt praised the Fed for the way it handled the Bear Stearns crisis and the larger liquidity problems haunting the financial sector.

"I think the actions they took around Bear Stearns were right. They put a lot of liquidity into the marketplace. There's not a whole lot more that I think the Fed can do. This has got to work its way through the system," he said.

"It was just so late and so big there wasn't a lot else we could do to compensate for it."

But the damage reverberated through the market, and the company's financial services businesses, through GE Capital, GE Money Bank and other units, were hit hard. Immelt said the Bear Stearns situation accounted for 5 cents of the 7 cents a share by which the company missed earnings estimates.

"March was an extraordinary month for financial services, but on balance the company strategically ... remains strong," Immelt said. "This is just a bump in the road."

He remains particularly confident in overseas sales. GE revenue grew 38 percent in emerging markets.

"It gives you a sense that outside the United States we're just not seeing a slowdown yet," he said. "I don't think we can assume that everything grows to the sky forever and we're not counting on that kind of robust international sales, particularly in the shorter-cycle businesses. But the global markets remain robust and the industrial businesses remain robust."

One of the company's primary strategies will be to continue to lower risk. GE has shed its bond insurance and parts of its consumer finance units.

"Slowly but surely we're exiting the most volatile parts of the business," he said. "I think this is a time to drive strategic change."

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