GE restates earnings since '01

Decision from top SEC accountant forces net $343 million reduction in profit; conglomerate hits quarterly earnings target.

NEW YORK ( -- General Electric announced Friday it is restating earnings a total of $343 million lower. This in response to a decision made over five years ago by the chief accountant of the Securities and Exchange Commission on how the company recorded interest rate swaps.

The diversified manufacturer also reported fourth quarter results that met forecasts, and it gave a guidance for first-quarter and full-year earnings that was roughly in line with current consensus.

And it confirmed that it is looking at strategic options for its plastics business, which had been widely reported but not previously commented upon by the company.

Shares of Dow component GE (Charts) fell about 1.3 percent in early trading following the earnings and restatement announcement.

GE said the restatement runs from 2001 through the third quarter of 2006. The earnings reduction occurred in 2001 and 2002, and earnings were increased in the restatement of of 2003 to the first part of 2006. It said the change in accounting practices did not affect fourth quarter results and should have a slightly positive effect on earnings over the next 10-plus years.

For the fourth quarter, the company had income from continuing operations of $6.6 billion, or 64 cents a share, in line with the forecast of analysts surveyed by earnings tracker First Call, and up from the $5.9 billion, or 59 cents a share, a year earlier.

It saw double-digit percentage earnings growth at most of its units in the quarter, except in its entertainment and industrial businesses. The industrial division, which includes the struggling plastics business, saw earnings fall 12 percent.

NBC Universal earnings gained only 5 percent in the fourth quarter. But the 5 percent gain was an improvement for the unit which ended the year with a 6 percent overall decline in earnings.

Revenue at continuing operations was up 11 percent to $44.6 billion, better than the forecast of $44.2 billion. The company said that organic growth, or gains excluding acquisitions and currency changes, was up 9 percent, which it said hit the company's internal targets.

It was the eighth straight quarter that the pace of organic revenue growth was two to three times greater than the growth rate for the entire U.S. economy, as measured by the gross domestic product.

"Demand for our services and products continues to grow globally," said a statement from CEO Jeff Immelt. "Our higher-margin services revenues grew 13% for the quarter, and global revenues accounted for $78 billion of revenues for the year, up from approximately $40 billion in 2000. We continue to exit slower growth and more volatile businesses, and we are currently reviewing the potential disposition of our plastics business."

The company said it now sees first-quarter earnings per share between of 43 to 45 cents a share, and full-year earnings of $2.18 to $2.23. The First Call forecasts are 44 cents for the first quarter and $2.22 for 2007.

Late Thursday, GE announced it is spending $8 billion for some of the diagnostic businesses of Abbott Laboratories (Charts).

GE is one of three Dow Jones industrial average components whose results were expected to affect Friday trading.

Friday morning, Citigroup (Charts), the nation's largest financial services firm, reported a narrow rise in earnings that edged past forecasts as it also raised its dividend. After the bell Thursday IBM (Charts) also reported slightly better than expected results, although its shares fell in after-hours trading.

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