General Electric Co.'s fourth-quarter net income fell 19 percent, hurt by lower profits on products like jet engines and continuing troubles in commercial real estate lending.
Still, GE showed some signs of stability in the final months of the year. The drop in profit was smaller than previous quarters because of gains in areas like power plant turbines and oil field equipment. And results surpassed Wall Street forecasts for the conglomerate, which is coming off one of its worst years in its 117-year history.
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"We saw some encouraging signs at year-end," GE Chairman and CEO Jeff Immelt said, pointing to improving orders for big equipment.
But some familiar problems that hampered GE in 2009 persisted. Profits for engines used in commercial and military jets fell, along with demand for GE's train locomotives, a likely sign that businesses remain hesitant to buy expensive equipment after a painful recession. Overall revenue fell 10 percent in the quarter to $41 billion.
The big finance unit — the source of most of GE's problems in 2009 — squeezed out a modest profit in the fourth quarter. But it was still dogged by problems in its holdings and lending in commercial real estate.
Profits fell 30 percent at NBC Universal, which has struggled with much lower advertising income and other problems. GE is selling its majority stake in the ailing entertainment unit.
For the quarter, GE posted net income of $2.94 billion, or 28 cents per share. That compared with $3.65 billion, or 35 cents, a year earlier. Analysts expected 26 cents per share in earnings.
One of world's largest companies, GE is considered a barometer of the nation's economic health since it is involved in sectors ranging from energy to finance. Homeowners buy GE kitchen appliances, power plants use GE gas turbines and hospitals buy GE MRI machines. Consumers use credit cards backed by GE money and businesses turn to the company for loans to buy expensive equipment.
GE's results for 2009 — a 37 percent drop in annual earnings — indicate just how deeply the recession affected the company.
It lost its top credit rating, cut its dividend by 68 percent, and saw its stock retreat to depths not hit since the early 1990s. GE's quarterly profits were down substantially as the recession gouged its industrial businesses and the financial crisis battered its GE Capital lending arm.
In an effort to achieve stability, GE is trying to rely much less on GE Capital's profits, which once made up half of the conglomerate's earnings. GE says that some segments, like consumer credit cards, are in better shape after GE Capital took steps like scaling back on lending and tightening credit.
But GE Capital will remain a sore point for GE in 2010. The company expects that losses from soured loans won't peak until this year. And the unit remains broadly exposed to commercial real estate, a market that is still in decline.
That unit posted a $593 million quarterly loss and lost a whopping $1.5 billion on the year.
GE expects to amass $26 billion in cash by the end of this year, much of it from its deal to sell its majority stake in NBC Universal to cable operator Comcast. GE has said little about how it plans to use that money.