General Electric yesterday reported third-quarter profits in line with expectations, but its shares declined amid concerns about weak margins, particularly at its plastics and NBC Universal units.
GE, with operations from jet engines to commercial lending, said profit was up 6.1 per cent on 12.3 per cent revenue growth.
"You didn't get that revenue creating any leverage with the bottom line for some reason, so maybe that's a question mark," said Thomas Leritz, portfolio manager, Argent Capital Management, of Clayton, Missouri, who follows GE but does not own the shares. "If your revenues are better, why aren't you seeing it fall to the bottom line?"
GE shares fell 1.4 per cent to $35.72 (€28.49) in early trade on the New York Stock Exchange. The shares have underperformed this year and are up just 2.5 per cent, compared with an 11.4 per cent gain in the blue-chip Dow Jones industrial average of which it is a component.
GE chairman and chief executive Jeff Immelt told investors on a conference call that he believes the US economy is holding up, though higher interest rates are likely to take some toll on consumer spending.
"The economy is solid. It's really being fueled by tremendous global infrastructure spending," Mr Immelt said.
The world's second largest company by market capitalisation reported net income of $4.96 billion, or 48 cents per share, compared with $4.68 billion, or 44 cents per share, a year earlier.
Earnings from continuing operations were 49 cents per share, matching the average forecast.
Revenue rose 12.3 per cent to $40.86 billion. Analysts expected $39.89 billion, on average.
Segment profit at the infrastructure unit, which makes products from windmills to locomotives, was up 24 per cent to $2.34 billion, with revenue up 20 per cent to $12.1 billion.
Earnings at NBC were off 10 per cent to $542 million, although revenue rose 20 per cent to $3.63 billion.
Weak margins at some television operations, and the cost of launching more movies than in the year-earlier quarter, offset the higher revenue, which was boosted by DVD releases, GE officials said on the conference call.
