GE Light on Revenue

The stock slips 2% after a mixed quarter and solid guidance.
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Updated from 7 a.m.

General Electric

(GE) - Get Report

met Wall Street estimates with its fourth-quarter profit, but revenue came in a bit light.

The Fairfield, Conn., industrial giant made $5.77 billion, or 55 cents a share, from continuing operations in the quarter ended Dec. 31. That's up from the year-ago $5.71 billion, or 54 cents a share. Revenue rose 3% from a year ago to $40.7 billion.

Analysts surveyed by Thomson First Call had forecast a 55-cent profit on sales of $42 billion. Shares of the Dow Jones Industrial Average component slipped 2% in early action Friday.

For the fourth quarter, industrial sales increased 4% to $25.6 billion, reflecting core growth and the net effects of acquisitions. Financial services revenue of $15.1 billion was about the same as last year, reflecting lower asset sales and the effects of dispositions. Financial services revenue growth excluding the previously announced correction for SFAS 133 and the effects of dispositions of GE's ownership interest in Gecis (now Genpact) was 5%.

Including a loss on discontinued operations related to GE's insurance businesses, latest-quarter earnings fell 46% from a year ago and hit 29 cents a share.

The company said revenue rose 11% from a year ago to $149.7 billion for 2005, with organic growth, excluding acquisitions and other unusual events, hitting 8%. Total year orders were up 10% in 2005, with demand coming from all the businesses. The equipment backlog was $24 billion at year-end and multiyear services agreements increased to $87 billion, up 15%.

"We finished 2005 as we expected with a strong quarter in our business segments that capped an excellent year," said CEO Jeff Immelt. "This year we executed on our organic growth initiatives, strengthened our organization and improved our portfolio, including the continued exit from the majority of our insurance businesses.

"Looking into 2006, the current economic environment remains positive and is in line with our expectations: we see continued strong growth in Asia and developing markets, mid single-digit growth in the Americas, and slow growth in Europe. This is the kind of environment that plays well to GE's products and services strengths."

GE said it bought back $5 billion of its own stock in 2005 and expects to buy back an added $7 billion to $9 billion this year.

For the first quarter ending in March, GE forecast a profit of 38 to 40 cents a share, up 15%-21% from a year earlier. For the year, the company fixed its EPS target at $1.94 to $2.02, up 13%-17%. Analysts were looking for 38 cents for the quarter and $1.99 for the year.

Early Friday, GE was down 59 cents at $34.09.