Shares of General Electric Co.
GE -1.50% declined nearly 2% premarket after the conglomerate's third-quarter results failed to beat the Wall Street consensus for the first time since the fourth quarter, 2008. Furthermore, the firm's industrial order year-over-year growth of 16% was a sharp slowdown from the second quarter's 24%, raising concerns that GE's profits next year will be smaller than expected. For the recent period, GE said its adjusted earnings rose to 31 cents a share from 28 cents in the year-ago period, with revenue virtually flat at $35.37 billion. Analysts had expected earnings of 31 cents a share, on average, with revenue of $34.84 billion.
General Electric Co reported an 18 percent profit rise that met Wall Street's expectations, helped by strong revenue growth in key foreign markets including Brazil, Russia and China.
The largest U.S. conglomerate said on Friday it expects earnings to rise at a double-digit percentage rate next year, following peer United Technologies Corp in trying to assuage investors' fears about Europe's brewing debt crisis.
"We continue to successfully navigate a volatile global economy," Chief Executive Jeff Immelt said in a statement.
Investors took heart in the company's 16 percent growth in industrial equipment orders -- an important indicator of future revenue, and in the 25 percent rise in international sales. GE has been counting on strong demand in rapidly developing economies to offset weak U.S. and European demand.
"The revenue number was strong and the organic growth rate in industrial was strong," said Jack De Gan, chief investment officer at Harbor Advisory Corp in Portsmouth, New Hampshire. "Those are telling and they give us a little bit of a look into next quarter and beyond."
But GE shares declined 1.4 percent to $16.40 in premarket trading as some raised concerns that its profit margins were weaker than expected in the quarter, with a low tax rate helping the company to meet expectations.
"Margins missed our forecast and were down year on year in the four big industrial businesses," said Jeffrey Sprague, managing partner at Vertical Research Partners. "There is little or no operating leverage in GE's portfolio due to low priced equipment in backlog and R&D headwinds."
