WASHINGTON – General Electric Co. said Friday its first-quarter earnings fell 36 percent on sharply lower profits at its troubled finance arm, but the results beat Wall Street forecasts in a glimmer of good news for the struggling company.
GE, which has a stake in almost every sector of the economy, from light bulbs to locomotives, posted earnings from continuing operations of $2.92 billion or 26 cents per share. That surpassed the 21 cents per share forecast by analysts.
Shares of the Fairfield, Conn.-based company rose 44 cents, or 3.7 percent, to $12.27 in pre-market trading.
After paying preferred dividends, GE’s net income totaled $2.74 billion, down from $4.30 billion, or 43 cents per share, a year earlier.
Revenue fell 9 percent to $38 billion, with sales down or flat in every division except GE’s energy business. The broad recession has hurt many of GE’s industrial businesses that make products like jet engines, oil field equipment and household appliances. Sales also declined at GE’s entertainment division, which includes the NBC television network.
Earnings at GE Capital fell 58 percent, but still amounted to $1.12 billion, holding to GE’s prediction last month that the segment would be profitable despite growing losses on its loans in areas like credit cards and commercial properties. GE said Friday that the unit is on track to turn a profit in 2009 despite its woes.
Jeff Immelt, GE’s CEO, said the company still believes it won’t have to raise new capital to prop up GE Capital. That has been a major worry for investors and contributed to a steep slide in GE’s share price earlier this year.
GE gave investors an exhaustive review of GE Capital’s finances in March in an attempt to rebuild confidence following a 60 percent slide in share prices from the start of the year. The company has warned that GE Capital, which once made up about half of GE’s profits, could just break even this year if the economy continues to worsen. But GE also said it wouldn’t have to plug more money into GE Capital, which has helped the share price recover somewhat.
The first quarter included some ignominious developments for GE, most of them caused by GE Capital. In late February, GE slashed its dividend by 68 percent, a move that GE expects will save it $9 billion in cash but was the first dividend cut since 1938. Two weeks later, GE lost its rare top ‘AAA’ Standard & Poor’s credit rating.