Engines lift GE's fourth-quarter profit

HARTFORD, Conn. - General Electric Co. delivered some cheer Friday to investors worried about a slowing economy, saying its quarterly profit rose 4 percent and reaffirming its outlook for 2008.

The conglomerate's big-ticket business — jet engines, railroad locomotives, and water treatment plants — powered GE's profit, posting $3.4 billion, or 26 percent more than the fourth quarter of 2006. It also gave GE a global reach that should help blunt the impact of a possible U.S. recession.

"Every place we went, there's a need for power, there's a need for planes, and there's just no signs that this global infrastructure boom is slowing at all," chief executive Jeff Immelt told investors in a conference call.

Total net income rose to $6.7 billion, or 66 cents a share, in the fourth-quarter ended Dec. 31, from $6.44 billion, or 62 cents a year earlier. Earnings from continuing operations climbed to 68 cents a share in the latest period, from 58 cents in the prior-year period.

Revenue jumped 18 percent, to nearly $48.6 billion. The company said more than half of its revenue is from outside the U.S.

Eric Boyce, portfolio manager at Hester Capital Management in Austin, Texas, said GE's performance was assuring.

"Investors are looking for some lifelines. They want to see a large multinational blue chip company come out and say things are not so bad and GE did that this morning," he said.

GE shares rose $1.10, or 3.3 percent, to $34.31 Friday.

Quarterly profit fell slightly below the average forecast of analysts surveyed by Thomson Financial, while revenue topped Wall Street's outlook of $47.28 billion. GE, meanwhile, had forecast a quarterly profit of 67 cents to 69 cents per share.

Immelt told analysts that GE met expectations.

"We said we were going to deliver a good EPS of 68 cents, up 17 percent. And that's what we've done," he said.

However, for 2007, net earnings of $22.2 billion came in below analysts' expectations of $22.4 billion, even though they rose 7 percent year-over-year.

Revenue, meanwhile, increased 14 percent to $172.7 billion for 2007, beating expectations of $171.4 billion, according to analysts surveyed by Thomson Financial.

In what one analyst said is a harbinger of future business, GE's total orders rose 18 percent, to $27 billion for the quarter, and climbed 18 percent to $98 billion for the year. Total backlog grew $19 billion year-over-year, a 42 percent increase.

"That's indicative of the future. That's what people are excited about," said Tony Boase, an analyst at First American Funds in Minneapolis.

Matt Collins, an analyst at Edward Jones in St. Louis, said Immelt is "definitely bullish on global infrastructure play."

"The question is how long does it last and how does the U.S. recession impact the rest of the world?" he asked.

Immelt said the U.S. consumer is "going to be tough."

GE will have lower gains in 2008, "but we're still seeing great global growth in assets and margins," he said.

GE, which makes transportation equipment, offers financial services and operates television network NBC, said it booked 20 percent or more profit growth from its energy, aviation, oil and gas, transportation and water segments during the fourth quarter.

The company said its financial services earnings grew 37 percent globally, as strong risk management helped the business weather volatile market conditions.

Citing regulatory changes and other factors, GE reported profits at the health care business dropped by 4 percent in the fourth quarter, to $1.03 billion.

However, quarterly profit at NBC rose to $923 million, up by 10 percent from the same quarter last year. The writer's strike had "no noticeable impact," chief financial officer Keith Sherin told analysts.

Looking ahead, GE said it expects to earn at least $2.42 a share from continuing operations in 2008, compared with Wall Street's consensus estimates of $2.43 a share. For the first quarter, the company also backed guidance for profit of 50 cents to 53 cents per share from continuing operations. Wall Street is predicting profit of 51 cents per share.