General Electric Co is expected to report a 14 percent rise in quarterly profit on Friday, with lower credit losses at its finance arm offsetting the dulling effects of a tepid economy on heavy equipment orders.
Wall Street will have a sharp eye on sales at the largest U.S. conglomerate's big industrial divisions, on which Chief Executive Jeff Immelt has pinned much of GE's growth hopes on as it exits the media business and scales back GE Capital.
The world's biggest maker of jet engines and electric turbines has been boosting its presence in big emerging markets, which have been snapping up its industrial goods.
China is a particular focus. Immelt expects it will someday overtake the United States as the world's largest economy.
It's going to be the biggest economy in the world, Immelt told Reuters. The only question is when.
Analysts expect GE to report fourth-quarter profit of 32 cents per share excluding one-time items, up from a year-earlier 28 cents per share, on revenue of $39.9 billion, down from $41.4 billion, according to Thomson Reuters I/B/E/S.
Investors will also have a sharp eye on GE's order backlog, which was steady at $172 billion at the end of the third quarter. The backlog is an indicator of future sales.
I'll be watching orders on the industrial side, orders and backlog, said Shane Sawyer, an analyst at the Marshall Large-Cap Growth Fund in Milwaukee, which holds GE shares. I'm hearing that utilities are going to start ramping up their capital spending, which would spur demand for GE equipment.
When fellow industrial SPX Corp laid out its 2011 expectations on Wednesday, it told investors that U.S. utilities' transformer orders had risen.
Fairfield, Connecticut-based GE said last month it would record a $500 million one-time after tax charge in the fourth quarter to cover the cost of cleaning up chemicals it had dumped into New York's Hudson River more than three decades ago. It expected that charge to be offset by one-time gains including a tax settlement.
GE shares have risen almost 11 percent over the past year, roughly in line with the Dow Jones industrial average.
U.S. regulators on Tuesday approved GE's plan to sell a 51 percent stake in GE's NBC Universal unit to No. 1 U.S. cable operator Comcast Corp, in a move that sets the stage for the conglomerate's eventual exit from the media business.
(Reporting by Scott Malone, editing by Gerald E. McCormick)