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Earnings preview: GE expected to post flat 3Q

Jonathan Fahey, AP Business Writer

NEW YORK (AP) -- General Electric Co. told investors earlier this year that they would see improving financial performance in the second half of the year. Apparently they were not convinced.

Investors expect GE to post slightly lower revenue for the third quarter when it posts results Friday morning. They also expect earnings per share to slip a penny compared with the same period last year.

Daniel Holland, an analyst at Morningstar, says that the companies that buy GE's turbines, engines and medical devices don't seem to be snapping up those big-ticket items quite as fast as analysts —and maybe GE — had hoped. "Customers are taking a little bit more time," he said.

GE is in the midst of a transformation to a more focused industrial conglomerate, shedding media and banking assets and beefing up its ability to provide complicated equipment, products and services to utilities, hospitals, oil and gas drillers and aircraft manufacturers. But analysts worry that in the process of selling profitable assets, such as NBC Universal and banking operations, the company is not replacing revenue and profits fast enough.

WHAT TO WATCH FOR: Whether GE is turning its book of orders, which the company has said is robust, into higher sales and profit. Investors will also look for clues about whether GE is getting closer to selling its large consumer credit card business, as expected.

WHY IT MATTERS: GE sells a broad array of equipment and services around the world, so its financial performance can shed light on the state of the global economy. GE sells aircraft engines, appliances, locomotives, medical devices such as CT scanners, gas-fired turbines, wind turbines and oil and gas drilling equipment. GE is a component of the Dow Jones industrial average.

WHAT'S EXPECTED: Analysts expect GE to make 35 cents per share, adjusted to exclude special items, according to FactSet, a penny less than last years' adjusted earnings. Revenue is expected to slip 1 percent to $36 billion.

LAST YEAR'S QUARTER: GE earned $3.49 billion, or 33 cents per share, on revenue of $36.35 billion in the third quarter of 2012.