GE takes fourth-quarter hit

first_imgSTAMFORD, Conn. – General Electric Co. said Friday fourth-quarter profits fell 46 percent as the industrial products, financial services and media giant absorbed nearly $3 billion in losses selling most of its insurance business. While the earnings results met expectations, revenue for the quarter was below what analysts expected. GE shares fell $1.31, or 3.8 percent, to close at $33.37 on the New York Stock Exchange. They have traded in a 52-week range of $32.66 to $34.36. GE said the sale of the volatile insurance business last year and growth in developing markets would help boost the bottom line. The Fairfield-based conglomerate predicted strong profits this year. Total revenue climbed 3 percent to $40.7 billion in the latest quarter from $39.7 billion a year ago. The revenue was about $1 billion less than expected due to fewer asset sales, changes in foreign exchanges and lower plastic volume in the plastics business, company officials said. 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 premiere 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. “We think a driver for the stock would have been a more aggressive outlook going into ’06,” said Robert Schenosky, an industrial analyst with Jefferies & 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 officials declined to comment on a report in The Wall Street Journal Friday that GE has joined with Japan’s Hitachi Ltd. to make a bid for nuclear-technology company Westinghouse Electric Co. 160Want local news?Sign up for the Localist and stay informed Something went wrong. Please try again.subscribeCongratulations! You’re all set! AD Quality Auto 360p 720p 1080p Top articles1/5READ MORESanta Anita opens winter meet Saturday with loaded card “We think we’re on track for an excellent year in 2006,” GE Chairman and Chief Executive Jeff Immelt said during a conference call with analysts. Brian Langenberg, managing director of Foresight Research Solutions in Oak Park, Ill., said he is optimistic about GE’s prospects this year, adding that the company is in the right markets and will no longer have to deal with the troublesome insurance business. “It was boring,” said Langenberg of the fourth-quarter results. “People wanted to be overwhelmed on the upside.” The company 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. 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. last_img read more