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GE 4Q profit meets forecast
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January 17, 2002: 9:26 a.m. ET
Cost management helps conglomerate stay on course amid slumping economy.
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NEW YORK (CNN/Money) - General Electric Co. posted a higher fourth-quarter profit Thursday that matched Wall Street expectations thanks largely to keeping costs in line.
The Dow component, considered an economic bellwether by many investors, posted quarterly earnings of $3.9 billion, or 39 cents a share, up from $3.6 billion, or 36 cents a share, a year earlier. Analysts polled by earnings tracker First Call anticipated a profit of 39 cents a share.
Fourth-quarter revenue decreased 3 percent to $33.98 billion.
The company's results come as several big corporations report dismal fourth-quarter results, particularly banks, automakers and airlines, reflecting the ongoing effects of the economic recession, the collapse of Enron, Argentina's economic crisis and the Sept. 11 terrorist attacks.
In December GE's new CEO, Jeffrey Immelt, who took the reins from the popular Jack Welch, bolstered investor confidence in the company and the economy by reaffirming expectations of hitting fourth-quarter earnings targets.
GE (GE: Research, Estimates) shares rose 75 cents to $38.42 in before-hours trading Thursday.
The company also raised the bar on 2002 earnings expectations. Immelt said the company is well-positioned to achieve 17 percent to 18 percent earnings growth in 2002, "even if the economy does not recover, and to grow more if a recovery does take place. Our best days are ahead."
According to First Call, Wall Street analysts currently expect GE to earn $1.57 a share in 2002, which would be about an 11.3 percent increase from the $1.41 a share it reported for 2001.
GE said its operating margin improved to 19.6 percent of sales from 18.9 percent a year earlier, as it converted to digital technology, which saved $1.6 billion. The company said a 13 percent increase in product services sales, which typically carry high margins, also helped.
During the quarter, NBC remained the No. 1 network for adults, helped by its hit show "The West Wing," news and sports broadcasts.
GE Capital Services, from which the company slashed 3,000 jobs last month, posted an 8 percent earnings increase for the quarter, reflecting double-digit growth in consumer services, mid-market financing and equipment management. That helped offset Sept. 11-related insurance losses of $400 million, the company said.
The company's power systems unit, which produces gas turbines, finished the year with an order backlog of $28.9 billion, up 15 percent from a year ago. Medical equipment orders increased 20 percent from last year. 
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