General Electric, the industrial conglomerate, reported fourth-quarter earnings on Friday that topped expectations, aided by strong performances by the company’s finance, health care and transportation units. þþIn its quarterly earnings report, G.E. said net income for the last three months of 2010 rose 51 percent, to $4.5 billion or 42 cents a share from $3 billion or 28 cents in the quarter a year ago. Earnings from continuing operations were $3.9 billion or 36 cents a share compared with $3 billion in the quarter a year ago. The results topped analysts’ forecasts of 32 cents a share, according to a survey by Thomson Reuters. þþNet income for the year was $11.6 billion, compared with $11 billion in 2009. þþOver all, revenue was up 1 percent to $41.4 billion in the fourth quarter. Analysts had estimated revenue of $38.9 billion for the fourth quarter. For the year, revenue was $150.2 billion, compared with $155.3 billion in 2009. þþThe company “ended 2010 with three consecutive quarters of strong earnings growth,” the chief executive, Jeffrey R. Immelt, said in a statement. “Strong performance at GE Capital was also encouraging.” þþMr. Immelt said that the company expected earnings growth to continue in 2011 and 2012. þþ“G.E. exits 2010 with significant momentum,” Mr. Immelt said. Estimates for revenue in the first quarter of 2011 are 29 cents a share and $33.7 billion in revenue, according to the Thomson Reuters survey. þþG.E. shares rose 5.6 percent in trading on Friday. þþWith G.E.’s diverse portfolio of business and finance units, including the nation’s largest nonbank financial institution, the company’s performance can provide a glimpse into a range of economic sectors, analysts said, including exports, manufacturing, health care, advertising and power generation. þþG.E.’s management has said it expected electricity demand to increase, for example, which would start to show up in orders for gas turbines. þþ“It is like a very diversified little country,” Richard Tortoriello, an equity analyst with Standard & Poor’s, said. þþLike many companies, General Electric fell victim to the market turmoil of 2007 and 2008 but it has worked to restore its core industrial business during the crisis, cut costs and to revive profits. Its stock recorded a full-year gain of 21 percent in 2010, closing at $18.29. þþMr. Tortoriello said that the company’s shares follow the performance of financial stocks more closely than they do those of other industrial companies, because G.E has a longer order cycle intrinsic to products like jet engines and heavy oil and gas equipment. þþ“It has a lot of long-cycle business that takes longer to recover,” he said. “And capital spending doesn’t tend to increase until you are pretty well into a recovery.” þþIn a conference call with analysts, Mr. Immelt said that good strength in orders, especially in rail and aircraft, had positioned the company well and that the economy was expected to get stronger. þþOverall orders in the fourth quarter were up 12 percent. “This is the highest order intake since 2007,” Mr. Immelt said, adding the backlog was broad-based. þþ“We feel very good about the backlog and how we are positioned going forward,” he said. þþOrders in the fourth quarter were up 20 percent for equipment and 5 percent for services, the company said. Energy infrastructure orders expanded 4 percent. þþIndustrial revenue was up 4 percent. þþAnalysts and investors have focused on the sources for profit improvement, looking to see if the company is deriving strength from industrial lines rather than a recovery in the finance unit, which struggled in the collapse of the commercial real estate market and from defaulting consumers. þþThe company said that GE Capital, which contributes less than 20 percent of total corporate earnings, reported net income of $1.1 billion in the fourth quarter, almost a billion more than a year ago. The unit was aided by lower loss rates. þþThe conglomerate has been simplifying its portfolio in other ways. þþOn Tuesday, a proposed deal to combine Comcast and NBC Universal was approved by the Federal Communications Commission and the Justice Department. The decision clears the way for General Electric to sell Comcast a majority stake in the network. þþMr. Immelt said that the company had expected the deal to close in the last quarter of 2010; now it is scheduled to close on Jan. 28. þþ“This delay resulted in a lower-than-expected tax rate in the fourth quarter and will lead to a higher tax rate in the first quarter,” he said in the statement. “We expect this will contribute to a significantly higher G.E. tax rate for full-year 2011.” þþIn line with its strategy of selling off noncore financial assets, it agreed in November to sell its Mexican consumer mortgage division to Santander of Spain for 2 billion pesos, or $162 million. þþMr. Tortoriello said that while the company was still making acquisitions in areas it sees as profitable, on the industrial side “they should continue to benefit from what we are seeing as general emerging market strength, as well as a modest recovery in consumer spending in the U.S. and in Europe.” þþG.E. has been focusing on expanding overseas sales, so that they compose 60 percent of revenue in 2010, up from 54 percent of revenue in 2009. Such overseas sales accounted for 36 percent of revenue in 2001. The company has been focusing particularly on Brazil, China, India and the Middle East. þþThe company announced this week during a visit to the United States by President Hu Jintao of China that the Asian country was a crucial market and that it was finalizing five agreements in aviation, energy and rail sectors that were expected to deliver more than $2 billion in revenue. þþIn November, Mr. Immelt said during a visit to India with President Obama that G.E. had finalized deals for power turbines and jet engines worth more than $1.4 billion, and planned to double overall exports in five years. þþG.E. also announced a series of investments in late 2010 that reflected its intentions to bolster businesses in crucial sectors, especially in the energy division. In October, it said it had agreed to buy Dresser, a privately held energy infrastructure and services company, for $3 billion. þþIn December, General Electric said that it would buy Wellstream Holdings, the British oilfield services company, for about $1.3 billion. þþ
Source: NY Times
