Profit from continuing operations fell 12 per cent to $4.48 billion, or 45 cents a share, from $5.11 billion, or 50 cents, a year earlier, matching the average analyst estimate. Revenue rose to $47.2 billion from $42.5 billion, the Fairfield, Connecticut- based company said today in a statement. GE said it will meet its revised profit forecast for 2008.
GE, a 106-year-old economic bellwether whose products range from lightbulbs to power-plant turbines, generated higher profit from its energy, technology and NBC Universal businesses. This year those earnings have been overshadowed by investor concern the global credit crunch will sap the finance units known as GE Capital. Finance profit declined 33 per cent in the quarter.
"GE coming in in-line should give the market some confidence and focus again on fundamentals," Tim Ghriskey, chief investment officer of Solaris Asset Management, based in Bedford Hills, New York, said in an interview on Bloomberg Television. "The devil is in the details and we need to see the details on the balance sheet and transparency on their credit situation."
Chief Executive Officer Jeffrey Immelt, 52, moved to shore up GE's cash October 1, deciding to raise $12 billion from selling common stock and $3 billion by selling preferred shares to investor Warren Buffett's Berkshire Hathaway Inc. Six days earlier, he had told investors no such move was needed, even as he lowered his target for GE earnings a second time this year.
"We are on track to meet our September 25 revised guidance for the full year, adjusted for dilution" from the recent stock sale, Immelt said in the statement.
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Earnings Forecast: GE was predicted to earn 45 cents in the quarter, the average estimate of 14 analysts in a Bloomberg poll, within the range of Immelt's prediction of 43 cent to 48 cents.
In April, a surprise drop in first-quarter profit spurred GE's biggest one- day stock decline since 1987.
"Challenging markets likely affected GE's quarterly marks and ability to complete asset sales, especially in commercial real estate," Goldman, Sachs & Co analyst Deane Dray wrote in a note to investors on Thursday. The fact that Immelt was giving an "unusually wide" five-cent range with just days left in the quarter showed there was a "significant level of uncertainty and volatility in the underlying businesses" at GE Capital, he said.
The world's financial markets are in their deepest crisis since the 1930s, triggered by a drop in US housing values that raised mortgage defaults and caused credit markets to seize. The Dow Jones Industrial Average, of which GE is the only original member, plunged 21 per cent this month through thursday, even after Congress passed a $700 billion economic rescue plan.
GE Shares: GE lost about half its stock value this year and on Thursday fell $1.64 to $19.01 in New York Stock Exchange composite trading: Investors have pushed down GE's stock and pushed up the credit default swaps used as insurance that it will repay debts.
They're concerned on two fronts: whether the world's largest maker of jet engines and power-plant turbines will see demand drop as customers lose access to credit and the global economy slows, and whether GE Capital has adequate resources. GE last year made more than half its profit from GE Capital.
Its bonds have traded this month as though GE were barely investment grade, even as it maintains the highest-possible AAA rating. The 4.75 per cent notes due in 2013 fell 5.2 cents to 80 cents on the dollar on Thursday to yield 10.2 per cent, according to Trace, the bond-pricing service of the Financial Industry Regulatory Authority.