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Friday, October 10, 2008

GE Profit Falls 22%, Hurt by Capital Finance

Associated Press

General Electric (GE), which makes everything from jet engines to water treatment systems and owns NBC Universal, says its third quarter profit fell 22 percent, hurt by its financing business.

GE, a bellwether for the U.S. economy, says net income fell to $4.3 billion, or 43 cents per share, compared with $5.56 billion, or 54 cents, a year earlier.

GE's revenue totaled $47.23 billion, up 11 percent.

Analysts polled by Thomson Reuters forecast earnings of 45 cents a share on revenue of $47.34 billion.

Results were dragged down by a 33 percent profit decline at its capital finance business.

GE's financial business has been battered by a severe credit crunch in global markets. GE last month lowered its quarterly guidance to between 43 cents and 48 cents per share.

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Most folks judge the health of a business by the revenue that comes in through sales. But not all revenue is equal. Companies can grow their sales by buying other companies, which means you don't get a clear view of how the real sales trends are moving.

So, many analysts, particularly those who look at retail, try to gauge what¿s known as "organic" growth, by looking at same-store sales. These are sales only at outlets open more than a year, so the metric can exclude any sales jump that comes from opening new locations. Retailers release same-store sales (which are frequently called "comps" since they're a true comparison from the previous period) every month.

Retail, incidentally, isn't the only industry to look at same-store sales. Hospital companies, also use the metric, to gauge how existing hospitals are performing compared to ones they just built or acquired.