GE's Profit Falls 3% After Accounting Change

General Electric Co. (GE), a powerhouse with operations ranging from finance to broadcasting, on Thursday posted a 3 percent decline in first-quarter net income after taking charges on accounting changes.

Excluding those charges, profit rose 17 percent as strength in the capital and power segments offset the effect of a weak economy on other units.

GE, the world's largest company by stock market capitalization, reported net earnings of $2.50 billion, or 25 cents per share, for the first quarter compared with $2.57 billion, or 26 cents per share, a year ago. Excluding items, earnings from ongoing operations totaled 35 cents per share compared with 30 cents per share a year ago.

Revenues for the quarter totaled $30.52 billion versus $30.49 billion in the first quarter of 2001.

The results met Wall Street targets. Analysts pegged GE at a profit of 35 cents per share, with estimates ranging narrowly from 34 cents to 36 cents per share, according to tracking firm Thomson Financial/First Call.

GE also reiterated financial guidance for 2002, pegging earnings at $1.65 to $1.67 per share -- in line with analysts' consensus target of $1.66 per share.


GE recorded a noncash charge of $1.015 billion, or 10 cents per share, for a required accounting change related to goodwill. That compares with a noncash transition charge in the prior-year period of $444 million, or 4 cents per share, related to accounting rules for derivatives, warrants, options and other financial instruments.

Among its more than 20 segments, GE Capital and Power Systems continued to drive increases in consolidated profit.

GE Capital, the company's financing arm and its largest individual operating unit, posted earnings before accounting changes of $1.657 billion versus $1.401 billion a year ago.

Power Systems reported income of $1.55 billion for the quarter on sales of $5.27 billion compared with income of $857 million on sales of $4.26 billion a year ago.

Shares of GE, a component of the Dow Jones industrial average, have dropped 9 percent so far this year, underperforming rivals United Technologies Corp. and Honeywell International Inc. as well as the blue-chip gauge, which have all gained ground since the start of 2002.