General Electric Co., regarded as a bellwether of the U.S. economy, missed earnings Friday and lowered its outlook for the full year, after the company took heavy losses in its finance division.
Shares of the second-largest U.S. company by market capitalization fell 5.4 percent on the news, dragging down the broader U.S. markets. Wall Street relies on this corporate giant to get a status check on the nation's economy.
GE said its profit fell 6 percent to $4.3 billion, or 43 cents per share, from $4.57 billion, or 44 cents per share, a year ago.
Earnings from continuing operations totaled $4.4 billion, or 44 cents per share, down 8 percent year-over-year. Revenue rose 7.8 percent.
Demand for our global infrastructure business remained strong, but our financial-services businesses were challenged by a slowing U.S. economy and difficult capital markets, said Chairman and CEO Jeff Immelt in a statement.
We had planned for a difficult environment, he said in a conference call today.
We had planned for an environment that was going to be challenging, but what I would say is kind of late in the quarter, particularly after the Bear Stearns event, we experienced an extraordinary disruption in our ability to complete asset sales and incurred marks of impairments and this was something that we clearly didn't see until the end of the quarter.
GE also lowered its 2008 profit target to a range of $2.20 to $2.30 a share, with second-quarter earnings pegged at 53 cents to 55 cents a share. Analysts had expected annual earnings of $2.43 and second-quarter earnings of 58 cents a share, according to FactSet.
Our focus on globalization has helped sustain the Company during the U.S. slowdown. Global revenues grew 22 percent, with strength in virtually every business, Immelt said in a statement. Developing country growth was 38 percent, and 14 percent in developed countries outside the U.S.
Nevertheless, we failed to meet our expectations, he added.
Health care and industrial earnings also registered double-digit profit falls, with infrastructure profit gaining 17 percent and NBC Universal's profit climber 3 percent.