NEW YORK (CNNMoney.com) -- General Electric Co. continued to show steady improvement in the fourth quarter, beating Wall Street's expectations for sales and profit on the back of cost cutting and a strong infrastructure business.
Though overall revenue and earnings fell year-over-year, sales and profit rose in every segment compared to the prior quarter, except for GE's struggling NBC Universal unit. Finance unit GE Capital continued to rebound, posting a profit in every segment except for mortgage lending for the second-straight quarter.
"GE's results were a little bit disappointing with their commercial real estate problems and the ongoing problems at NBC, but it's not easy to turn around a super tanker very quickly," said Peter Cohan a venture capitalist, management consultant and GE shareholder. "They're heading in the right direction."
GE said it expects its mortgage lending losses to peak in 2010 with a strong return to growth next year. The company also said it expects to grow its dividend in alignment with improved earnings in 2011. GE had slashed its dividend 68% to just 10 cents per share last February as the recession cut into the conglomerate's financial results.
"GE's environment has improved and we saw some encouraging signs at year-end," said GE Chief Executive Jeff Immelt on a conference call with investors, noting that the company's cost-cutting contributed heavily to its stabilization.
"We have taken a lot of strong actions to keep the company stable in the future," said Immelt, adding that the company anticipates "solid growth in 2011 and beyond."
The Fairfield, Conn.-based conglomerate said its fourth-quarter net income fell 19% to $3 billion, or 28 cents per share, for the period ended Dec. 31.
Results included a one-time charge of 9 cents per share for restructuring and cost-cutting and a gain of 6 cents a shares for tax-related benefits. Without the charge and benefits, GE earned 31 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, forecasted earnings of 26 cents per share.
Sales fell 10% to $41.4 billion, topping analysts' forecasts of $40 billion.
Sales dropped in all of the company's segments last quarter, but cost-cutting initiatives managed to buoy profits in some units. Compared to the third quarter, all GE units posted steady improvement in sales and nearly all segments grew their profits.
The notable exception was NBC Universal. On a year-over-year basis, revenue fell just 4% but profit tumbled 30%. Compared to the prior quarter, revenue was up 5% but profit was still down a whopping 18%.
Though the company was optimistic about an advertising market that is "definitely improving," it expects NBC to suffer $250 million in losses from its coverage of the Winter Olympics in February. That's larger than the $200 million loss that Immelt had forecast in December. The network will also have to pay "Tonight Show" host Conan O'Brien and his staff $45 million in a widely publicized settlement.
Analysts say NBC's expected losses won't help the network's struggles but they also won't hurt its parent company too much. Since the losses are out in the open, they will likely have a limited impact on the stock as well.
"The losses sound big for the average person on the street, but for GE, they're pretty trivial," said Cohan. NBC accounts for just 10% of GE's overall revenue.
Sales from the energy infrastructure unit fell 9%, but earnings were up 9% compared to a year ago. At the consumer and industrial division, sales fell 8% but profit rose nearly 278%.
The technology infrastructure unit had falling revenue and profit last quarter. Sales at the division were down 10% and earnings fell 16%. Still, compared to the prior quarter, both profit and sales were up by double digits.
Immelt said the company is in an "immensely stronger position." GE's Chief Financial Officer Keith Sherin declined to offer any specific guidance but said on the call that GE has a "tremendously positive outlook."
Revenue from the company's finance arm fell 15% to $12.5 billion in the quarter, accounting for more than a third of GE's overall revenue.
The unit was again profitable in the fourth quarter, earning $336 million. That was down 67% from the same period last year but up 28% from the previous quarter.
Immelt reiterated in a statement that the company's finance division has become "safer and more focused."
The company's infrastructure and consumer businesses fared very well in 2009 despite the turbulent economy. But much of the company has been rocked by the downturn, dragged by a significant drop in profit and revenue at GE Capital and NBC.
GE sees hope for the future. It will likely soon shed its majority stake in NBC and it completed its long-term funding plan for GE Capital a year ahead of schedule.
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