GE profit falls 49%, tops expectations

— -- General Electric said Friday its ' second-quarter profit tumbled 49% as the recession continued to hurt its finance unit and lowered sales across its wide range of industrial businesses.

The conglomerate's earnings edged past Wall Street expectations and GE said its big capital lending unit is on track to post a profit this year. But revenue came up short.

Investors are combing corporate earnings for clues on the direction of the nation's moribund economy and GE, which lends money and makes products ranging from microwaves to wind turbines, is considered a barometer of its health. The company's results suggest the recession is still sapping demand for goods.

GE reported net income was $2.6 billion, or 24 cents a share, after paying preferred dividends. That compared with $5.1 billion, or 51 cents a share, a year earlier.

Revenue fell 17% to $39.1 billion.

Analysts polled by Thomson Reuters expected the company to earn 23 cents a share on revenue of $42.16 billion.

GE Capital, which lends money on everything from credit cards to commercial real estate, posted a modest profit of $590 million. But those results were still 80% lower than a year ago, further proof of GE Capital's struggles with mounting losses on its bad loans during the financial crisis.

Still, GE Capital "remains on track to be profitable for the full year," Jeff Immelt, GE's chief executive, said.

GE is in the process of shrinking GE Capital and reducing its reliance on riskier debt like commercial paper. But its earnings show that the unit continues to face serious challenges. For example, GE's real estate unit, which owns office buildings and makes loans for commercial properties, posted a $237 million loss compared with $484 million in profits a year earlier.

GE's industrial units have also suffered. GE said its second-quarter sales fell 7% to $26 billion, a decline led by home appliances, train locomotives and diagnostic equipment for hospitals.