NEW YORK – General Electric Co. (GE) Friday reported a slightly higher fourth-quarter profit and raised the low end of its 2006 earnings forecast, citing strong order growth, but quarterly revenue fell short of Wall Street expectations.
GE shares, part of the Dow Jones industrial average, were down almost 4 percent in afternoon trade on the New York Stock Exchange. Shares were down $1.37, or 3.9 percent, at $33.31.
Counting Friday's decline, GE shares are down 5 percent over the past 52 weeks, lagging both the Dow, which is up 3 percent, and the Standard & Poor's 500 index, which has gained 8 percent.
It was GE's biggest one-day percentage drop since a 4.5 percent drop on March 24, 2003 and puts the stock back at levels last seen in early October.
While profit from continuing operations rose, profit on a net basis fell 46 percent, primarily from the loss the company posted in selling most of its reinsurance unit.
The results matched analysts' forecasts, according to Reuters Estimates, and were in line with the forecast GE gave in November, when it announced the sale of the unit, to Swiss Re, for up to $7.6 billion.
The company, whose size and range of businesses make it a barometer of the overall U.S. economy, said five of its six business divisions contributed double-digit earnings growth during the quarter.
But, as expected, profits and sales fell at GE's media unit, NBC Universal — its only division to forecast flat earnings growth this year.
"When Jeffrey Immelt exuberantly ejected the reinsurance business, I think people were anticipating the opportunity for GE to surprise on the upside with their guidance," said Robert Gowen, investment analyst with BB&T Asset Management, adding he was disappointed by revenue in GE's commercial finance arm.
"Revenues were a little bit light, yet they made their quarter," Gowen said. "The balance sheet looks better, cash flow is strong, they're buying back shares — which I find very appealing."
Profit from continuing operations rose to $5.77 billion, or 55 cents a share, from $5.72 billion, or 54 cents a share, a year earlier.
With the 46 percent dip, profit on a net basis was $3.06 billion.
Sales from continuing operations, at $40.7 billion, were below forecasts of $42.2 billion.
The Fairfield, Connecticut-based company also raised the lower end of its 2006 profit forecast by 2 cents a share, now targeting earnings from continuing operations at $1.94 to $2.02, an increase of 13 percent to 17 percent.
Analysts are forecasting 2006 profit of $1.98 a share and sales of $165 billion.
"Looking into 2006, the current economic environment remains positive," said Chief Executive Jeffrey Immelt.
GE forecast first-quarter profit in a range of 38 to 40 cents per share, or $3.9 billion to $4.1 billion, representing a 15 percent to 21 percent gain from 2005's first quarter.
It said segment profit will be up by at least 10 percent in each of its divisions except the media unit, where it will be down about 10 percent.
"NBC ratings have been weak," said Thomas Leritz, portfolio manager with Argent Capital Management in St. Louis. "They've had really good runs in the past, but competitors have caught up and surpassed them. They need to work on fixing that, and I think that they will."
Under Immelt, who took over as CEO in 2001, GE has scaled back its insurance business to focus on higher-growth areas, aiming for consistent double-digit annual profit growth. In 2004, it spun off Genworth Financial Inc., and it plans to sell its remaining stake in the life and mortgage insurance company in 2006.