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GE Says 1st-Quarter Profit Climbed 13%

Earnings: Company posts record revenue of $22.6 billion, citing strong results from its financial services unit.

April 09, 1998| From Reuters

General Electric Co. on Wednesday reported a 13% jump in first-quarter profit, matching Wall Street estimates, on record revenue of $22.6 billion, citing strong results from its GE Capital Services financial services arm.

The conglomerate, whose businesses range from NBC Television to aircraft engines and mortgages, said earnings rose to a record $1.89 billion, or 57 cents a diluted share, from $1.68 billion, or 50 cents, in the year-earlier period.

Revenue jumped 12% to $22.6 billion from $20.16 billion, in part because of higher sales of spare parts and services by its equipment businesses.

Chairman John Welch said GE, which Forbes magazine just named the most powerful corporation in the United States, was well-positioned to deliver another year of record performance.

"The record first-quarter results demonstrate that GE, with its mix of leading global businesses, can consistently deliver top-line growth, increased margins and strong cash generation," Welch said.

GE, a component of the Dow industrials and one of the first large companies to report during this earnings season, said profit at its GE Capital Services rose 17% to $881 million. Its strength was credited to its rail car and aviation leasing businesses, of which GE Capital is the nation's largest, and its satellite, reinsurance and mortgage insurance operations.

Operating margins grew to a quarterly record of 15.1% of sales, from the year-ago period's 14.3%, the company said, due to improved results from its product services and quality initiatives. Cash generated from operating activities was up 15% to $1.5 billion.

GE did not break down results from its television business, which includes the NBC network and CNBC cable financial news channel.

GE's shares fell $1 to close at $86.13 on the New York Stock Exchange.

In a separate earnings report Wednesday, Dow Jones & Co. said its first-quarter net income rose 12% to $24.5 million, or 24 cents a diluted share, from $21.9 million, or 22 cents, a year earlier.

The publisher of the Wall Street Journal was expected to earn 26 cents a share, the average estimate of six analysts surveyed by IBES International Inc.

Revenue rose 3% to $621 million, from $606 million.

Chairman Peter Kann said its business television alliance with NBC was showing promise since being announced in December, and that he sees growth opportunities in television after a sizable reduction in the unit's first-quarter losses.

The second half of the year also should bring Dow Jones greater profit after shedding its Dow Jones Markets unit, Kann said.

The company is co-owner with NBC of the CNBC operations in Asia and Europe, and this month it started to provide news content to CNBC in the United States.

New York-based Dow Jones also repeated that it expects to take a "significant" charge against earnings in the second quarter, when the sale of its the Markets unit would probably be completed.

Dow Jones shares fell 19 cents to close at $53.13 on the NYSE.

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