GE posts 29% gain in net income

NEW YORK (CNNMoney.com) -- General Electric reported a surge in quarterly earnings Friday that beat analysts' expectations, but sales dropped, lagging behind forecasts.

The conglomerate said its third-quarter earnings rose 29% to $3.2 billion. Earnings per share rose to 29 cents per share from 22 cents a year earlier.

The company also said its revenue fell to $35.9 billion, down 5% compared to the year-earlier quarter.

Earnings beat analysts' expectations but revenues fell behind.

Analysts had expected the conglomerate to report a 1% decline in revenue for the third quarter, to $37.5 billion, according to a consensus forecast compiled by Thomson One Analytics. Analysts had also expected an earnings increase to 27 cents per share.

In its statement, the company said losses eased in its GE Capital credit unit. Problems in the unit shook GE's blue-chip standing during the recent financial crisis.

GE said its lower overall revenue was affected by lower equipment sales and reduced assets in GE Capital - primarily from the real estate market. But Chief Executive Jeffrey Immelt said, in a teleconference with analysts, that equipment orders were growing, indicating that revenue could get better in the future.

"Our losses our declining, our equipment orders are growing," he said. "I think those are all positives for GE."

GE's (GE, Fortune 500) stock dipped more than 3% after the opening bell. GE's stock had been slightly higher in pre-market trading until the earnings report knocked it into the negative.

GE is a massive conglomerate that manufactures a wide range of products, including jet engines, appliances, railroad locomotives, health care technologies, light bulbs, electric cars and technological devices for the oil and gas industry. The company, based in Fairfield, Conn., also owns NBC Universal and has divisions in business and consumer finance.

A close look at the performance of its different divisions provides a mixed picture.

Energy infrastructure took the hardest hit, in terms of sales, dropping 14% year-over-year to $8.4 billion in the third quarter. Profits were flat, at about $1.6 billion.

Sales for technology infrastructure slipped 1% to $9.2 billion, while profit fell 10% to $1.5 billion.

Sales were flat for NBC Universal, at more than $4 billion, as profit fell 15% to $625 million.

Revenue in the division for home and business solutions slipped 1% to $2.1 billion. Profit was flat at about $100 million.

GE Capital is the largest part of the conglomerate in terms of sales, accounting for $11.6 billion, a decline of 3% from the same period last year. It's less of a power player in terms of profit, which totaled $871 million - about half the earnings compared to the infrastructure divisions for technology and energy. But GE Capital's profit surged dramatically from the third quarter of 2009, when it totaled $141 million.

"GE Capital continues to outperform expectations and positions itself to play offense," said Immelt.

The CEO said that GE Capital was driven by improvements in most of its portfolios, with "particular strong performance" in consumer and commercial lending and leasing.

Morningstar analyst Daniel Holland said that the company's health care division was one of its strongest, but it was still stuck with the underperforming commercial real estate assets in its GE Capital division.

Health care, which is part of the technology infrastructure division, saw a 4% sales bump to nearly $4 billion and a 14% profit gain to $581 million. On the other hand, sales in real estate slipped 3% to $953 million, while losses were reduced by 25% to about $400 million.

"You feel pretty good that the company is operating on all cylinders," Holland said. "The big hope is that you see the revenues turning out (better)."