Updated from 7:06 a.m. EDT

General Electric ( GE) reported first-quarter earnings from continuing operations of $2.9 billion, or 26 cents a share, down 35% from a year earlier, as sales fell 9% to $38.4 billion.

Analysts surveyed by Thomson Reuters expected the industrial conglomerate to earn 21 cents a share on revenue of $39.8 billion.

After paying preferred dividends, GE's net income totaled $2.7 billion, down from $4.3 billion, or 43 cents a share, a year earlier.

General Electric said its capital finance division earned $1.1 billion in the quarter and "remains on track" to be profitable for the year. Profit at GE Capital fell 58%.

"Revenues and profitability declined year-over-year in our financial services business and we continue to experience rising delinquencies," said CEO Jeff Immelt in a statement Friday. "However, we have taken prudent actions to address these challenges, including tightening risk requirements, improving liquidity and reducing leverage. Also, questions about credit ratings have been resolved. We still have a strong rating and our outlook is stable."

Immelt said GE still believes it won't have to raise new capital to prop up GE Capital. That has been a major worry for investors and contributed to a steep slide in GE's share price earlier this year.

GE gave investors an exhaustive review of GE Capital's finances in March in an attempt to rebuild confidence following a 60% slide in GE's share price from the start of the year. The company has warned that GE Capital, which once made up about half of GE's profits, could just break even this year if the economy continues to worsen. But GE also said it wouldn't have to plug more money into GE Capital, which has helped the share price recover somewhat.

The first quarter included some ignominious developments for GE, most of them caused by GE Capital. In late February, GE slashed its dividend by 68%, a move that GE expects will save it $9 billion in cash but was the first dividend cut since 1938. Two weeks later, GE lost its rare top "AAA" Standard & Poor's credit rating.

On Friday, General Electric said first-quarter infrastructure and media earnings together were flat compared with last year. Earnings at the company's energy infrastructure operations rose 19%, while technology infrastructure saw earnings growth of 6%.

Infrastructure orders in the quarter were $19 billion, a decline of 10%, GE said, while high-margin service orders rose 7%.

Backlog remained flat at $171 billion from the end of 2008, but was up 6% from a year earlier.

GE said its cable operations continued to deliver double-digit growth, but NBC Universal had a "tougher performance overall due to a soft advertising market and fewer major DVD releases" compared with a year earlier.
Copyright 2008 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed. AP contributed to this report.

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