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GE revenue falls short of estimates amid economic volatility

A General Electric refrigerator is seen on sale at an appliance store in Westminster, Colo., in this Jan. 15, 2016, file photo.

RICK WILKING/REUTERS

General Electric Co. missed analysts' fourth-quarter sales estimates as revenue in the oil and renewable-energy segments plummeted amid a sluggish global economy.

Sales of $33.8-billion fell short of the $35.9-billion expected by analysts surveyed by Bloomberg. It was the seventh time in the past eight quarters that revenue has missed estimates.

"We recognize that the first few weeks of 2016 have been especially volatile," Chief Executive Officer Jeffrey Immelt said in a statement Friday. "However, our orders in the fourth quarter grew 1 per cent organically and our backlog grew to $315-billion with Alstom."

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The results come as Immelt works to reshape GE around industrial manufacturing and data analytics while shedding finance and consumer-focused operations. The company closed the acquisition of Alstom SA's power business in the quarter as GE deepened its bet on energy markets.

GE declined 1.2 per cent at 7:37 a.m. in New York before regular trading. The stock's 23 per cent gain last year outpaced the 0.7 per cent drop in the Standard & Poor's 500 Index.

Fourth-quarter adjusted profit was 52 cents a share, topping the 49 cents predicted by analysts.

Crude Rout

Revenue in the oil and gas unit dropped 16 per cent as GE navigated a rout in crude prices, while the newly created renewable-energy segment declined 16 per cent as well. Sales in the power unit increased 3 per cent. Across GE's industrial divisions, sales and operating profit fell 1 per cent on an organic basis.

GE's power-generation operations grew considerably during the quarter after the company closed the Alstom purchase, adding a sizable installed base of gas and steam turbines.

The expansion of GE's industrial operations, with products including locomotives, oilfield equipment and jet engines, contrasts with a pullback at GE Capital. The lending unit was so large it imperiled its parent during the financial crisis. GE closed $104-billion in finance-asset sales in 2015, ahead of the company's expectations.

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GE Capital

GE Capital said it is on track to apply this quarter to shed its status as a systemically important financial institution. With the lending business shrinking, the unit's fourth-quarter sales fell 11 per cent.

The portfolio overhaul gained urgency during the quarter as Nelson Peltz's investment firm disclosed holding a $2.5-billion stake in GE. Trian Fund Management LP said it supported the GE Capital divestitures and pushed for Immelt to follow through on his broader plan to boost margins.

GE plans to relocate to Boston, ending a four-decade stint in Fairfield, Connecticut, a decision announced last week that's intended to help streamline corporate headquarters and improve the company's ability to recruit software engineers.

Operating earnings are forecast at $1.45 to $1.55 a share this year, Immelt said, reaffirming an earlier projection. Organic revenue is expected to rise as much as 4 per cent.

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