GE meets profit target despite subprime hit

NEW YORK (CNNMoney.com) -- Corporate bellwether General Electric rode out problems in its mortgage business due to the battered subprime lending sector to post earnings growth in line with forecasts.

The diversified conglomerate whose business range from financial services to media and from jet engines to light bulbs, earned $4.5 billion or 44 cents a share, from continuing operations.

That's up from $4.2 billion, or 40 cents a share, on that basis a year earlier and in line with the forecast of analysts surveyed by earnings tracker First Call.

GE's (Charts) revenue rose 6 percent to $40.2 billion, beating the forecast of $39.8 billion. The company said it saw 8 percent revenue growth, excluding the effect of acquisitions and changes in currency exchange rates.

The company's WMC Mortgage unit is the nation's No. 5 lender to people with less than top credit ratings, a sector known as subprime lending which has been battered by rising delinquencies and defaults recently. The No. 2 subprime mortgage lender, New Century Financial (Charts), filed for bankruptcy protection on April 2, while the No. 1 subprime lender, HSBC (Charts), has taken a $10.6 billion charge for bad loans, primarily in its U.S. mortgage unit.

GE did not detail the extent of problems there, but it said "GE Money's earnings were tempered by challenges at its U.S. mortgage business." It also said its health care had a temporary regulatory suspension on shipments of its surgical supplies in the period.

"Both of these businesses are in great shape and should rebound during the remainder of the year," said CEO Jeff Immelt.

The company gave second quarter earnings guidance of 52 to 54 cents a share, up from 47 cents a share a year ago. It's a range that includes the current First call EPS forecast of 53 cents. It also reaffirmed its full-year earnings guidance of $2.18 to $2.23 a share, up 10 percent from 2006 results.

The company had broad gains in revenue earnings across its various businesses. The biggest exception was industrial, where revenue fell 9 percent and profit declined 20 percent, the only unit to see lower income due to a sharp drop in profits from its plastics business, which it is looking to sell.

Its NBC Universal media unit saw a 22 percent drop in revenue, but that was primarily because of a comparison to the year-ago period that included the Winter Olympics, which produced $684 million in revenue. Still it would have seen an 8 percent drop in revenue, even excluding the Olympic revenue. Earnings there increased 6 percent in the period, though.

NBC has been hit in recent days with the controversy over the broadcasts of radio shock jock Don Imus, which it had carried on its MSNBC cable news network.

After numerous major advertisers, including Procter & Gamble (Charts) and Staples (Charts) announced they would pull ads from MSNBC due to racially insulting comments he made about the Rutgers' women's basketball team, NBC announced Wednesday it would stop carrying the broadcasts.

Thursday afternoon CBS (Charts), which had carried the show as part of its radio unit, also announced it was firing Imus.

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