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General ElectricE Shares Get Punished on Revenue Miss

General Electric's (GE) fourth-quarter revenue declined 8% year over year and fell short of the consensus analyst estimate by a wide margin, sending the shares down 3% in premarket trading Friday to $18.59.

GE CEO Jeff Immelt warned of "continued volatility in 2012," but tried to sooth investors by saying the company was "confident in our 2012 framework to realize double-digit earnings growth in our Industrial and Capital segments, increase margins and provide dividend growth to our shareholders in line with earnings."

GE's fourth-quarter revenue totaled $37.973 billion, while analysts polled by Thomson Reuters were expecting $40.033 billion. CEO Jeff Immelt said that total revenue was "up 4%, excluding the impact of NBCU." The company sold 51% of its stake in NBC Universal to Comcast (CMCSA) during the first quarter of 2011.

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The company did beat the consensus earnings estimate of 38 cents a share, reporting fourth-quarter EPS of 39 cents.

The main factor in the overall revenue decline was $5.3 billion in revenue classified as "corporate items and eliminations," in the fourth quarter of 2010, which mainly represented the NBC Universal sale. This item was reduced to $460 million in the fourth quarter of 2011.

Two of GE's six segments saw year-over-year revenue declines, including GE Capital, with a 9% decline in revenue to $10.745 billion, and the Home& Business Solutions segment, with a 4% decline in revenue, to $$2.2 billion.

Despite the decline in revenue, GE Capital's profit increased 58% year over year, to $1.6 billion. The company said that GE Capital's ending net investment -- which is the segment's adjusted total assets -- net of cash, totaled $445 billion at quarter-end, almost one year ahead of previously planned reductions," and that "by continuing to focus on high-return segments, GE Capital targets further reducing ENI to a range of $425 - $440 billion in 2012, while still growing earnings double-digits."

GE CEO Jeffrey R. Immelt

Immelt said that "GE Capital volume grew to $49 billion, up 13% from the third quarter and margins remained healthy at 5.4%," adding that "as we have previously stated, we expect to restart the dividend from GE Capital to GE this year, subject to Federal Reserve review."

GE Capital is looking to improve its liquidity, with a new Internet deposit gathering platform, when it completes its deal to acquire $7.5 billion in deposits from MetLife Bank, which is a subsidiary of MetLife (MET). The deal is expected to be completed during the second quarter.

The bright spot for GE in the fourth quarter was the energy infrastructure segment, with a 19% year-over-year increase in revenue, to $12.988 billion, although the segment's fourth-quarter profit was flat at $2.214 billion.

The transportation segment saw the largest year-over-year increase in revenue, which was up 43% to $1.464 billion in the fourth quarter, with the segment's profit doubling, to $226 million.

The aviation segment saw a 2% year-over-year increase in revenue to $4.924 billion, and a 4% increase in profit to $850 million.

While the health care segment's fourth-quarter revenue was up 1% year over year to $5.163 billion, the segment's profit dipped 5%, to $953 million.

Immelt said that "GE's portfolio demonstrated strength and resilience, delivering earnings growth for the seventh consecutive quarter while also generating substantial operating cash flow to support investment in our business and dividend growth."

The CEO also said that GE expected "continued volatility in 2012," and that the company was "restructuring our businesses in Europe to reflect market conditions."

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