General Electric Co's quarterly earnings topped Wall Street expectations on Friday, as it kept costs in line despite sluggish demand for jet engines, railroad locomotives and other heavy equipment.
The results showed the largest U.S. conglomerate's efforts to stabilize itself after two brutal years seemed to be paying off, investors said. Its shares rose about 1 percent in premarket trading.
The 19-percent drop in profit marked GE's eighth straight quarter of profit decline, though Chief Executive Jeff Immelt said the company is on track for flat earnings this year.
"They exceeded expectations on both the top line and the bottom line, which is a positive," said Perry Adams, senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan. "Orders came in strong, grew sequentially from third quarter and the backlog improved slightly from the third quarter."
Fourth-quarter profit attributable to common shareholders fell 19 percent to $2.94 billion, or 28 cents per share, from $3.65 billion, or 35 cents per share, a year earlier.
Analysts on average expected profit of 26 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 10 percent to $41.44 billion. Wall Street had looked for revenue of $40.02 billion.
Immelt called the company's 2010 financial "framework," which calls for earnings to be about equal to 2009 results, "quite achievable." The company posted a 2009 profit of $1.03 from continuing operations.
Analysts forecast 2010 profit of 94 cents per share on sales of $152.77 billion.
The world's biggest maker of jet engines and electricity-producing turbines has been hit hard by the worst economic downturn since the Great Depression and is working to scale back its hefty GE Capital finance arm, which has invested heavily in commercial real estate.
REAL ESTATE STILL 'A QUESTION MARK'
Profit fell 67 percent at GE Capital, though Immelt noted that every segment of that business except for its commercial real estate arm made money.
"Everything except commercial real estate seems to be doing a little bit better," said Thomas Villalta, portfolio manager at the Jones Villalta Opportunity Fund in Austin, Texas, which holds GE shares. "Commercial real estate always seems to be a question mark for them."
This will be a year of significant portfolio changes for GE. The company reached an agreement last month to sell a majority stake in its NBC Universal media business to top U.S. cable operator Comcast Corp (CMCSA.O). GE officials expect that deal — which needs regulatory approval — to close late this year.
It is also still pruning its GE Capital finance arm, which has operations ranging from lending money to mid-sized businesses to leasing airplanes.
Shares were up 14 cents at $16.16 in premarket trading. GE shares have risen 28 percent over the past year, trailing the 33 percent rise of the Dow Jones industrial average. (.DJI)
The Fairfield, Connecticut-based company competes with a broad lineup of some of the world's largest companies, including Germany's Siemens AG (SIEGn.DE), French industrial group Alstom SA (ALSO.PA) and Swiss engineering firm ABB Ltd (ABBN.VX).
