By Scott Malone
BOSTON (Reuters) - General Electric Co <GE.N> posted quarterly earnings that topped Wall Street expectations as it kept costs in line despite sluggish demand for jet engines, railroad locomotives and other heavy equipment.
The results, reported Friday, showed the largest U.S. conglomerate's efforts to stabilize itself after two brutal years seemed to be paying off, investors said. GE shares rose 3.25 percent.
Profit fell 19 percent from a year earlier, GE's eighth straight quarter of profit decline, but Chief Executive Jeff Immelt said the company is on track for flat earnings this year.
"They exceeded expectations on both the top line and the bottom line, which is a positive," said Perry Adams, senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan. "Orders came in strong, grew sequentially from third quarter, and the backlog improved slightly from the third quarter."
Fourth-quarter profit attributable to common shareholders fell to $2.94 billion, or 28 cents per share, from $3.65 billion, or 35 cents per share, a year earlier.
Analysts on average expected profit of 26 cents per share, according to Thomson Reuters I/B/E/S.
Revenue fell 10 percent to $41.44 billion. Wall Street had looked for $40.02 billion.
Immelt called the company's 2010 financial "framework," which calls for earnings to be about equal to 2009 results, "quite achievable." The company posted a 2009 profit of $1.03 per share from continuing operations.
Analysts' average forecast for 2010 is 94 cents per share on sales of $152.77 billion.
"We're positioned for growth in 2011 and beyond," Immelt told investors on a conference call.
The world's biggest maker of jet engines and electricity-producing turbines has been hit hard by the worst economic downturn since the Great Depression and is working to scale back its hefty GE Capital finance arm, which has invested heavily in commercial real estate.
REAL ESTATE STILL 'A QUESTION MARK'
Profit fell 67 percent at GE Capital, though Immelt said every segment of that business, except its commercial real estate arm, made money.
"Everything except commercial real estate seems to be doing a little bit better," said Thomas Villalta, portfolio manager at the Jones Villalta Opportunity Fund in Austin, Texas, which holds GE shares. "Commercial real estate always seems to be a question mark for them."
This will be a year of significant portfolio changes for GE. The company reached an agreement last month to sell a majority stake in its NBC Universal media business to top U.S. cable operator Comcast Corp <CMCSA.O>. GE officials expect that deal -- which needs regulatory approval -- to close late this year.
GE expects to end the year with about $25 billion in cash, which it will consider applying to share buybacks or to raising its dividend. GE last year cut its dividend by 68 percent.
The company could be affected by President Barack Obama's proposed tax on Wall Street banks to reimburse U.S. taxpayers for a federal bailout of the financial system. GE, which took part in the Temporary Liquidity Guarantee Program, could be on the hook for about $500 million if the proposed tax takes effect, Chief Financial Officer Keith Sherin said.
Even with that potential hit, GE expects to record flat earnings at GE Capital this year, Sherin said.
GE shares were up 52 cents at $16.54 in late-morning trade on the New York Stock Exchange. The shares have risen 28 percent over the past year, trailing the 33 percent rise of the Dow Jones industrial average. <.DJI>
The Fairfield, Connecticut-based company competes with a broad lineup of some of the world's largest companies, including Germany's Siemens AG <SIEGn.DE>, French industrial group Alstom SA <ALSO.PA> and Swiss engineering firm ABB Ltd <ABBN.VX>.
(Additional reporting by Nick Zieminski and Ryan Vlastelica in New York, Dominic Lau, Joanne Frearson and Simon Falush in London, and Blaise Robinson in Paris; Editing by Lisa Von Ahn, Derek Caney and John Wallace)