GE Beats, But Not Where It Matters

GE (NYSE: GE) beat analyst estimates are its revenue last quarter rose 1% to $41.4 billion. Fourth-quarter 2010 earnings from continuing operations (attributable to GE) were $3.9 billion, or $0.36 per share, up 33% from the fourth quarter of 2009.

But, GE did not do terribly well where it mattered. “GE ended 2010 with three consecutive quarters of strong earnings growth,” GE Chairman and CEO Jeff Immelt said. “Industrial segment revenue was up 4%, with Industrial organic growth of 6%. Fourth quarter orders grew 12% year-over-year, with a 20% increase in equipment and a 5% expansion in services. Importantly, overall orders in Energy Infrastructure grew 4%. Total company backlog in the quarter increased $3.1 billion to a record $175 billion. But, that obscured the points found it the segment breakouts of GE’s businesses.

Revenue at GE’s flagship energy infrastructure business fell 3% to just below $11 billion. The unit and its businesses are often presented by management as critical to growth over upcoming years, particularly overseas. Segment profit for the unit fell 2% to $2.2 billion, so GE has seen no improvement in efficiency in the unit.

GE may have made a mistake by selling its controlling interest in NBCU as it recovered from the advertising recession. It sales were up 12% to $4.8 billion. Jeff Zuckerman finally had a win as he was pushed out the door. Segment profit for the entertainment unit was $830 million, up 38%.

The slow crawl back of GE’s financial business is not impressive and shows that the parent has not been able to solve many of the unit’s problems. This business and related operations caused Wall St. to panic two years ago as rumors of a collapse of GE destroyed its stock price. GE Capital revenue fell 4% to $11.9 billion. Operating income was $1.1 billion.

GE said that the quarter was its first one of positive revenue growth in nine quarters. That is hardly worth bragging about

GE’s share price is down more than half since Immelt took over as CEO. He will begin to chair a new presidential economic panel. The company’s financial results show he had better spend more time in the office.

Douglas A> McIntyre