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GE revenue lower as EU crisis takes toll

GENERAL Electric’s fourth-quarter revenue fell short of Wall Street expectations because of slower-than-expected growth in Europe, sending its shares down 2.5% in premarket trading.
 
The largest US conglomerate expects a volatile year but plans to build up its emerging market presence and restructure its European operations.

Its profit came in 1 cent per share above Wall Street forecasts.

“We’re concerned about the revenue miss,” said Oliver Pursche, president of Gary Goldberg Financial Services in Suffern, New York.

“That’s really what we’re focused on this earnings season. We’re not so concerned about being a penny above or below expectations, because that can be handled with accounting.”
 
The world’s biggest maker of jet engines and electric turbines said net income from continuing operations rose 0.6% to $3.93bn, or 37c/share, compared with $3.90bn, or 36c/share, a year ago.

Factoring out one-time items, profit came to 39c/share, above the 38c analysts had forecast, according to Thomson Reuters I/B/E/S.

Total revenue came to $37.97bn, down from $41.23bn and below the $40.03bn analysts had expected. Factoring out the effects of last year’s sale of a majority stake in NBC Universal revenue would have been up 4%.

“We expect continued volatility in 2012 and have prepared for it by investing in new products and technology, expanding our growth market footprint and taking important steps to strengthen risk management,” said CEO Jeff Immelt in a statement.

“We are restructuring our business in Europe to reflect market conditions.”

Investors said Europe’s financial crisis was taking a toll on the company.

“In December, GE indicated that it was managing Europe well. Now that’s what is pointed to for the light revenue. I think that’s kind of a weak excuse,” said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire.

“I was hoping the reason for the light revenue was because of the capital business.”

GE is less dependent on Europe than rivals Siemens and Philips Electronics, which earlier this month warned that the eurozone debt crisis would hurt their results this year.

GE kicked off a wave of earnings reports from big US manufacturers, with blue chip peers United Technologies, Caterpillar and 3M all due to follow suit over the next week.

As of Thursday’s closed, GE shares had risen about 2% over the past year, lagging the 6% rise of the Dow Jones industrial average.

GE shares were down 47c at $18.68 in premarket trading from Thursday’s close at $19.15.
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