GE: 'On track for solid earnings growth'

NEW YORK (CNNMoney.com) -- General Electric reported quarterly earnings that rose from a year earlier and said its finance arm, GE Capital, continues to show signs of stabilization.

The Fairfield, Conn.-based company said net income jumped 16% to $3.1 billion. Earnings from continuing operations rose 14% to $3.3 billion, pushing earnings per share to 30 cents. Analysts polled by Thomson Reuters had forecast a profit of 27 cents per share for the quarter.

Sales fell 4% to $37.4 billion in the quarter, missing the $38.4 billion in revenue expected by analysts.

"GE's economic environment continues to improve," said GE Chief Executive Jeffrey Immelt in a statement, adding that the company is "on track for solid earnings growth."

The company said "losses have peaked" at its closely watched GE Capital division, which accounts for more than a third of overall revenue. The lending unit saw sales slip 3% to $12.3 billion, but profit surged 93% from a year earlier to $830 million.

The commercial real estate business remained "the one tough area in GE Capital," losing another $524 million in the second quarter, which GE said was in line with expectations.

But based on the unit's overall recovery in the quarter, GE Capital won't need contributions from the industrial side of the business, the Immelt said druing a post-earnings call with investors.

NBC Universal's revenue rose 5% to $3.75 billion, while profit jumped 13% to $607 million in the quarter. At its home and business division, sales climbed 4% to $2.25 billion as profit rose 59% to $143 million.

Orders on the rise: The company cited growth in orders as another bright spot in the quarter, with total orders up 8% to $19.2 billion, boosted by improved demand for oil and gas, and health care equipment. Equipment orders jumped 17%, with a 20% increase in orders at the energy infrastructure division and a 14% rise in technology infrastructure orders.

The company saw its first growth in commercial orders since the third quarter of 2008, and GE expects there will be single-digit orders growth in the second half of the year, Immelt said.

Dividend hike on the way: GE reiterated its expectations to grow earnings and dividends "in 2011 and beyond." In February of 2009, the company cut its dividend by 68% to 10 cents per share, and investors have been looking for clues about when it will be raised.

Immelt said on the conference call that GE expects to pay a "normal" dividend of 45% of earnings in 2012 but he didn't give a specifc per-share figure.

"We're trying to be thoughtful about it and cautious about it," he said. "We do believe we'll have the capital flexibility in the years to come."

Cash on hand: The company continued to build up its cash reserves, putting aside another $74 billion during the quarter.

"The cash story and the balance sheet shrinking story is a very positive story for GE and our investors," said Immelt.

By the end of the year, GE expects to have $25 billion in cash at the parent level. But on the company's earnings call, UBS analyst Jason Feldman asked how much of a "backstop" GE really needs.

"Clearly we are going to have more cash in the future than we did in the crisis," Immelt answered. "We are going to have the flexibility to do what we want with the company."

GE brought in $3.8 billion in cash from industrial operations and said it is on track to generate $13 billion to $15 billion this year. But at the same time, industrial sales fell 6% to $24.4 billion in the quarter.

Shares of GE (GE, Fortune 500) slid 3.3% after the market open. The stock had jumped 3.5% immediately after the company released its results.