General Electric reverted to form with no big surprises in its latest earnings report, and investors shocked by an unexpected profit shortfall three months ago showed their appreciation.
Even though earnings fell in the latest quarter, investors helped GE shares hold their ground Friday.
The conglomerate whose interests range from making loans, TV shows and light bulbs to building industrial machinery reported a 6 percent decline in its second-quarter earnings but matched analyst's expectations.
GE's share price edged up 2 cents to close at $27.66 even as the Dow Jones industrials lost more than 100 points and briefly slid below 11,000 for the first time in two years.
“Overall, I think people are getting to be less fearful about the perceived risks vs. the actual risks of GE's portfolio or how they run the business,” said analyst Nicholas Heymann of Sterne Agee. “At the margin things are better than people expected or worried would not be performing well.
“I think people are having a bit of relief.”
That was a big change from April 11 when the normally reliable GE shocked investors with a 6 percent decline in first-quarter earnings without preparing them for it.
Its shares dropped 10 percent that day and led the overall market lower. GE blamed disruptions in its financial business late in the first quarter for its inability to advise Wall Street in advance about the deterioration in earnings.
Also Friday, GE announced it agreed to sell its Japanese consumer finance unit, which includes the Lake personal loan business, wholly owned credit cards and mortgages under GE Consumer Finance Co Ltd. and its subsidiaries, to Shinsei Bank, a midsize Japanese bank. The sale is expected to close in the next quarter.
Fairfield-based GE earned $5.07 billion, or 51 cents per share, compared with a year-earlier profit of $5.38 billion, or 52 cents per share. Revenue rose to $46.89 billion from $42.38 billion a year earlier.
The sale of the Japanese consumer finance business was the most recent in a series of moves by GE to reshape its portfolio to focus on faster growth businesses. GE announced Thursday that it wants to spin off its lighting and appliance businesses.
Shifts in GE's portfolio are welcomed by many analysts. Several investor analysts have criticized GE for its difficulties getting all the parts of its vast array of businesses running smoothly at the same time.
“We believe we had a solid performance in a tough environment,” GE chief executive Jeff Immelt told analysts in a conference call Friday.
Immelt told investor analysts that growth internationally is “offsetting a sluggish U.S. economy” and GE's long-term positioning outside the United States has shown benefits in the second quarter, he said.
GE officials also highlighted a 7 percent gain in revenue and 1 percent increase in profit for NBC Universal. Immelt has made clear that NBC is not for sale, despite calls by some analysts for such a move.