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GE's Earnings Rise 9.7%, Matching Estimates

January 18, 2002|RACHEL LAYNE | BLOOMBERG NEWS

General Electric Co.'s fourth-quarter earnings rose 9.7% as it cut costs and sales fell for a third quarter in a row, with the U.S. recession hurting businesses such as plastics and broadcasting.

Net income increased to $3.93 billion, or 39 cents a share, from $3.59 billion, or 36 cents, a year earlier, matching analyst estimates. Sales dropped 2.9% to $33.98 billion because the largest company by market value sold some operations, mainly in its GE Capital finance unit.

Profit rose as Chief Executive Jeffrey Immelt increased margins last year to 19.6% of sales by eliminating jobs, exiting lower-margin markets and reducing administrative costs. Immelt has said he's now considering buying companies with $100 billion in revenue to add more profitable sales growth and augment units such as medical and power systems.

Shares of General Electric, maker of aircraft engines and light bulbs, and parent of the NBC network, rose $1.08 to $38.75 on the New York Stock Exchange.

In the quarter, a $642-million gain from the sale of a majority stake in a satellite business helped offset $656 million in expenses related to the cost cutting. GE Capital also had an $84-million loss on investments in bonds of Enron Corp. after the energy trader sought bankruptcy protection.

Immelt reiterated that profit this year will rise at least 17% as gains at the finance, power and medical businesses more than offset declines at NBC, plastics and electrical-equipment units. A change in how acquisitions are accounted for will increase profit by about 4%, he has said.

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