NEW YORK (CNN/Money) -
General Electric Co. posted improved second-quarter results Friday that met Wall Street expectations, and it reaffirmed its full-year earnings target.
The diversified manufacturer, entertainment and financial services conglomerate posted net income of $4.4 billion, or 44 cents a share. That's in line with the consensus estimate of analysts surveyed by earnings tracker First Call and up from the $3.9 billion, or 39 cents a share, it earned in the year-earlier period.
The company also said during a teleconference with investors Friday that it anticipates third-quarter revenue will increase 8 percent to 10 percent from a year earlier and quarterly profit will increase 20 percent to 25 percent. GE also said it remains comfortable with full-year earnings estimates of $1.65 to $1.67 a share
GE attributed much of the expected third-quarter increase to its plastics business and the NBC television network, among other units.
GE's (GE: Research, Estimates) shares added $1.25 Friday to finish at $28.60 on the New York Stock Exchange.
The company, whose diverse products include light bulbs, home appliances, jet engines and medical equipment and which also owns one of the world's leading financial services companies as well as broadcaster NBC, saw mixed results across its divisions.
Robert Friedman, an equity analyst at Standard & Poor's Corp., said he is skeptical that GE will continue to post double-digit earnings growth.
"I see their rate of growth declining over time," Friedman said. "I don't see how you can keep growing earnings 10 to 15 percent with a company this size."
The company has been suffering from investor distaste of late for large firms with labyrinthine balance sheets in the wake of high-profile corporate accounting scandals and questionable CEO behavior such as at Enron Corp. and Tyco International (TYC: down $0.87 to $13.73, Research, Estimates).
However, GE has been trying to distance itself from such scandals by opening up its finances more than it has and holding investor conference calls for the first time.
CEO Jeffrey Immelt continued to distance GE from the fusillade of corporate bad news Friday during the company's second such conference call.
"It starts with performance and integrity. We've been in most of our businesses for over 100 years and we have a very experienced leadership team," Immelt said. "We've got the world's best audit staff. We've got a culture of integrity, and that's what investors have to respect."
Immelt also stressed the importance of the CEO's behavior as a model for corporate culture.
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"I'm responsible for this company. I stand behind the results. I know the details, and I think the CEO has to be the moral leader of the company," Immelt said. "I think high standards are good, but let's not anybody be confused, it's about performance with integrity. That's what you have to do."
GE Capital Services, its largest unit, saw earnings fall 18 percent to $1.3 billion as revenue fell 4 percent to $13.9 billion. But NBC earnings rose 11 percent to $545 million as revenue rose 9 percent to $2 billion. Industrial products and services operating income fell 19 percent to $310 million even as revenue climbed 8 percent to $2.3 billion.
The results included a number of special charges and items, including a $110 million after-tax loss to write down the value of WorldCom (WCOME: Research, Estimates) bonds and a $350 million charge for prior-year loss events at Employers Reinsurance Corp. It also had a gain of $358 million from the favorable settlement of a dispute with the Internal Revenue Service regarding aircraft engine exports, and a $70 million after-tax benefit from terminations of gas turbine orders.
GE has delayed plans to split off ERC, its property-and-casualty operations, because of weakness in recent initial public offerings and the unit's steep losses, the Wall Street Journal reported Friday, citing people familiar with the matter. Employers Reinsurance posted a $236 million loss for the second quarter.
GE still has not confirmed a March 15 report in the Journal that it plans to spin off ERC.
A GE spokesman declined to comment on the matter Friday.
Revenue rose to $33.2 billion from $32 billion a year earlier, but missed First Call's forecast of $35.9 billion. But CEO Jeffery Immelt said, "Our third quarter looks promising, and we remain comfortable with the targets we've communicated for the full year."
The company's earnings guidance late last month called for earnings per share of $1.65 to $1.67 for the full year, up from $1.41 in 2001. First Call's forecast still stands at $1.65 a share.
GE said it anticipates stronger third-quarter results across many of its divisions, including at GE Capital, where it expects earnings to increase more than 14 percent from a year earlier, including writedowns associated with WorldCom and insurance claims related to last September's terrorist attack on the World Trade Center. Excluding those items, earnings will increase 30 percent to 35 percent.
The company also anticipates a 10 percent to 15 percent increase in both profit and revenue for its plastics unit, a division Immelt considers a strong barometer for the broader economy. However, the company expects lower volume in plastics orders during the third quarter from the second quarter.
NBC is expected to post 25 percent to 30 percent revenue growth in the third quarter and 50 percent to 60 percent operating profit, thanks to the syndication of the popular sitcom "Will & Grace," the integration of Hispanic broadcaster Telemundo International and ad pricing.
Reuters contributed to this report.
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