Updated with latest stock price, conference call coverage.
FAIRFIELD, Conn. (
shares rose Friday after the Dow component reported impressive numbers for the fourth quarter, beating Wall Street expectations for both its profit and revenue.
Investors were also enthused by comments from company executives that GE would be "opportunistic" about buybacks and that it planned to grow the dividend in line with earnings.
"It's not an either/or on this menu. I think these are all things we will be able to do," said Chief Financial Officer Keith Sherin said of the potential buyback and dividend boost on the conference call.
The stock was up 4% to $16.66 in morning trades with more than 35 million shares changing hands just over half an hour into the session. The issue's trailing three-month daily average volume is 75.1 million.
"GE's environment has improved and we saw some encouraging signs at year-end," said Jeff Immelt, the company's chairman and CEO, in a press release. Immelt indicated on the call that a dividend hike could occur this year.
For the three months ended Dec. 31, General Electric said it earned $3 billion, or 28 cents a share, on both a net and continuing operations basis. In last year's fourth quarter, GE reported earnings of $3.7 billion, or 36 cents a share.
Revenue came in at $41.4 billion for the quarter, down from a year-ago equivalent total of $46.2 billion, but up from a total of $37.8 billion in the third quarter.
The consensus estimate of analysts polled by
was for a profit of 26 cents a share in the December period on revenue of $40.02 billion. The performance bucked the trend for GE, which had beat earnings expectations but fallen short on revenue in each of the past three quarters of fiscal 2009.
GE said its closely watched Capital Finance unit was "executing well in a difficult environment" and that it earned $300 million in the quarter with every segment of its business being profitable except for commercial real estate. The company said consumer delinquencies are stabilizing, and that it boost loan loss reserves for the Capital Finance unit by $700 million in the latest quarter to $8.1 billion. That increase was a slight improvement from the third quarter when it raised reserves by $800 million.
On the industrial side of the business, GE said cash flow from operations reached $16.6 billion in the latest quarter, that fourth-quarter infrastructure orders rose $3.7 billion a sequential basis to $22.1 billion, and that the company's total backlog of equipment and services stood at $175 billion, a slight inicrease from the prior period.
The profit in the latest quarter was helped by earnings growth of 9% for the Energy Infrastructure business, and 278% for the Consumer & Industrial business, but the year-over-year overall drop resulted from declines in profits for the Capital Finance (67%), NBC Universal (30%) and Technology Infrastructure (16%) operations.
The industrial and financial conglomerate also backed a recent outlook for a flat performance in 2010, with Immelt saying: "We believe this is quite achievable and sets us up for solid growth in 2011 and beyond." GE earned $1.03 per share for fiscal 2009.
He added: "Moreover, due to the company's strong cash position, we will have an opportunity to keep GE secure and create long-term shareholder value."
That last statement will likely be seized upon by analysts wondering what the company plans to do with its considerable cash position, which Immelt said stood at $72 billion at year-end on a consolidated basis. Debt reduction, M&A, even a dividend hike at some point are all possibilities.
GE shares closed Thursday down almost 3% at $16.02. The stock lost roughly 7% in 2009 but had risen 6% since the start of 2010 through yesterday's close.
Written by Michael Baron in New York.