By Scott Malone
BOSTON (Reuters) - General Electric Co called the end to its two-year slump on Friday, reporting earnings that beat Wall Street forecasts and saying profit should rise through the rest of 2010.
The largest U.S. conglomerate -- whose shares eased 2.5 percent, erasing some of the almost 5 percent they had gained over the past week -- said the worst was behind its beleaguered finance arm.
The world's biggest maker of jet engines and electricity-producing turbines disclosed a 24 percent drop in orders for new energy equipment and a 21 percent drop in orders for new aviation equipment.
Some investors expressed concern about the 8 percent overall decline in orders and a sharper-than-forecast revenue decline, raising concerns about the sustainability of the company's turnaround after a slump that shook confidence in the sole original member remaining in the Dow Jones industrial average.
"They blew away the bottom line number, and it's tough to find fault with it, but the revenue number is light," said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds GE shares in its portfolios.
But he was concerned that the backlog remained constant. "I'm not seeing a big pickup in orders here so I'm a little bit concerned about the pace of activity," he added.
GE said its total order backlog -- an indicator of future sales of big-ticket items like jet engines and electricity-producing turbines -- held steady at $174 billion.
"We are leading a renewed GE," said GE Chief Executive Jeff Immelt, who has engineered a major shift in GE's portfolio of businesses, including pruning GE Capital and agreeing to sell a majority stake in NBC Universal to No. 1 U.S. cable operator Comcast Corp. "We expect to grow earnings and dividends in 2011 and beyond."
PROFIT TOPS STREET VIEW
GE, which also builds wind turbines and loans money to mid-sized businesses, reported net income attributable to common shareholders came to $1.87 billion, or 17 cents per diluted share per share, down 32 percent from $2.75 billion, or 26 cents per share, a year earlier.
Profit from continuing operations came to 21 cents per share, above the 16 cents analysts had expected, according to Thomson Reuters I/B/E/S.
Revenue declined 5 percent to $36.6 billion. That was less than the $37.1 billion analysts had forecast.
"This is the low water mark for the year, for the cycle. They're delivering. They're shrinking GE Capital," said Keith Goddard, president of Capital Advisors Inc in Tulsa, Oklahoma, which owns GE shares. "You're finished worrying where's the bottom in GE's earnings power. That was it."
The company, which also makes railroad locomotives and CT-scan machines, no longer provides investors with numeric per-share profit targets, instead offering a "framework" of how it expects its individual divisions to perform.
GE Capital, which invested heavily in commercial real estate, turned out to be the company's Achilles' heel during the downturn, and the company aims to cut it back to produce just 30 percent to 40 percent of overall profit, rather than the more than half it represented before the recession.
It recorded a 41 percent operating profit decline in the quarter. GE's energy arm saw profit climb 12 percent.
GE also said that officials with the U.S. Securities and Exchange Commission had asked for further information related to some comments the company had made in 2008 about its liquidity, during the worst of the global credit crisis.
GE shares fell 48 cents to $19.02 on the New York Stock Exchange, still well over triple the 18-year lows they tested in March 2009. They have risen approximately 68 percent over the past year, outpacing the 40 percent rise of the blue-chip Dow Jones industrial average.
The Fairfield, Connecticut-based company's competitors include a broad lineup of some of the world's largest businesses, including Germany's Siemens AG, French industrial group Alstom SA and Swiss engineering firm ABB Ltd.
GE kicks off a wave of earnings reports from top U.S. industrials, with United Technologies Corp, Eaton Corp and Honeywell International Inc all due to report over the coming week.
(Additional reporting by Nick Zieminski and Edward Krudy in New York and Jon Hopkins, Brian Gorman, David Brett and Dominic Lau in London, Blaise Robinson in Paris; Editing by Derek Caney)
