(Agencies)
Updated: 2008-04-11 21:38

BOSTON - General Electric Co (GE.N) reported on Friday an unexpected 6 percent drop in profit, as the slumping US economy and credit crunch drove down profits at its financial, industrial and healthcare units.

General Electric's Jeffrey R. Immelt in Los Angeles, May 24, 2007. GE reported on Friday an unexpected 6 percent drop in profit, as the slumping US economy and credit crunch drove down profits at its financial, industrial and healthcare units. [Agencies]

Shares of the second-largest US company by market capitalization fell 5.4 percent on the news, dragging down the broader US markets. Due to the size and variety of its operations, GE is regarded as a bellwether of the US economy.

"It's confirmation that we're in a recession," said Jerome Heppelmann, portfolio manager at Liberty Ridge Capital in Berwyn, Pennsylvania.

The company also lowered its earnings forecast for the year, reflecting a slower economy and challenging capital markets.

"These results confirm that the slowdown is widespread and beginning to impact capex (capital expenditures) and longer-cycle businesses," said Stephen Surpless, senior analyst at Cantor Fitzgerald in London.

"While the credit crisis might be nearer to the end than the beginning, according to some, the impact on the real economy is taking place and is unlikely to abate in 2008," he added.

By the numbers

GE, which also has media and finance arms, reported profit of $4.3 billion, or 43 cents per diluted share, compared with $4.57 billion, or 44 cents per diluted share, a year earlier. Revenue rose 7.8 percent.

Profit from continuing operations of 44 cents per share compared with analysts' average forecast of 51 cents, according to Reuters Estimates.

The sharpest drop in segment profit came at the conglomerate's financial divisions, with commercial finance down 20 percent and GE Money consumer finance down 19 percent.

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