GE Profit Sinks but Meets Expectations
Friday, January 20th 2006, 10:45 am
By: News On 6
STAMFORD, Conn. (AP) _ General Electric Co. reported Friday its fourth-quarter profit fell 46 percent as the huge industrial products, financial services and media conglomerate absorbed nearly $3 billion in losses as it sold most of its insurance business. The results matched Wall Street's expectations, and GE raised the lower end of its earnings guidance for the year.
The company, based in Fairfield, said net income was $3.06 billion, or 29 cents a share, for the three months ended Dec. 31, compared with $5.6 billion, or 53 cents per share, a year ago.
Total revenue climbed 3 percent, to $40.7 billion in the latest quarter from $39.7 billion a year ago.
The results reflected a net loss of $2.7 billion from its discontinued insurance operations. Excluding that, GE's earnings per share matched the 55 cents expected by analysts surveyed by Thomson Financial.
``We finished 2005 as we expected with a strong quarter in our business segments that capped an excellent year,'' said GE Chairman and Chief Executive Jeff Immelt. ``This year we executed on our organic growth initiatives, strengthened our organization and improved our portfolio, including the continued exit from the majority of our insurance businesses.''
In a conference call with analysts, Immelt said the insurance losses dampened profits, but GE was happy to resolve the issue with the sale. He said the company's growth initiatives were working well, especially in developing countries.
``We think we're on track for an excellent year in 2006,'' Immelt said.
GE officials declined to comment on a report in The Wall Street Journal that GE has joined with Japan's Hitachi Ltd. to make a bid for nuclear-technology company Westinghouse Electric Co.
For the year, GE reported net income of $16.4 billion, or $1.54 per share, compared with $16.8 billion, or $1.61 per share, in 2004. Revenue rose to $149.7 billion from $134.5 billion a year ago.
GE said all six of its business units achieved double digit earnings growth for the year.
Its shares fell 54 cents, or 1.6 percent, to $34.14 in morning trading on the New York Stock Exchange. They have traded in a 52-week range of $32.66 to $34.36.
GE sold most of its insurance unit last year to Swiss Reinsurance Co. for $6.8 billion in cash and stock. The sale completed a strategy to leave a troublesome segment and redeploy cash to investors and faster-growing businesses.
During the quarter, NBC Universal was the only segment that did not achieve profit growth of more than 10 percent. NBC had profits of $801 million, down 7 percent from a year ago, as the premier of the film ``King Kong'' generated more than $500 million in global box office receipts while the network has coped with the loss of popular television shows in recent years.
Profits jumped 25 percent to $769 million in the industrial business, while consumer finance earnings increased 21 percent to $770 million and commercial finance increased 18 percent to $1.28 billion. Infrastructure increased 16 percent to $2.4 billion and health care increased 16 percent to $995 million.
Much of the growth is taking place around the world as GE boosts its business in developing countries. During the quarter GE acquired a majority interest in the oldest savings bank in the Philippines, announced the construction of the first desalination plant in Mexico, and reached a deal to sell 300 locomotives in China.
GE said it expects earnings per share of $1.94 to $2.02 this year, up 13 percent to 17 percent and a boost of 2 cents on the bottom end from its previous forecast. The consensus of analysts surveyed by Thomson Financial is for earnings of $1.98 per share.