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GE earnings expected to rise on sale of NBC

Jonathan Fahey, AP Energy Writer

NEW YORK (AP) -- General Electric Co.'s sale of NBC Universal will likely propel the company to strong first quarter earnings, but growth in the conglomerate's underlying businesses could be somewhat weak.

GE is expected to post a gain of $1 billion on its $16.7 billion sale of 49 percent of NBC Universal to Comcast when it reports results on Friday. But a weak economy in Europe and an uncertain one in the U.S. may hold back GE's growth in healthcare, appliances and power generation equipment.

The company's sales of aircraft engines and oil and gas drilling equipment and services are expected to post strong gains, however.

GE is in the midst of shaping itself into a more focused conglomerate that sells and services industrial equipment and appliances. It is shedding divisions such as NBC Universal and shrinking its banking operations.

It is using some of the cash generated by the sales to buy companies that complement its new focus. Last week GE announced it had agreed to buy the oilfield equipment maker Lufkin Industries Inc. for $3.1 billion.

"We continue to expect big steps towards a simpler, more focused portfolio," said Scott Davis, an analyst at Barclays, in a recent report. Davis predicts the quarter to be the weakest of 2013, which he calls "A critical year of rebuilding credibility."

WHAT TO LOOK FOR: GE's earnings growth is expected to be tepid in the quarter, but investors expect rosy growth projections for the remainder of the year. They hope to hear that orders of gas-fired turbines will help sales pick up later in the year. They expect continued growth in aviation, powered by GE's new aircraft engine. And oil and gas, an important new focus for the company, is expected to see the biggest profit growth of all GE divisions this year.

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 such as the NBC sale, according to FactSet. That would be one penny per share better than the company's adjusted earnings last year. Analysts expect the company to post revenue of $34.54 billion.

LAST YEAR'S QUARTER: GE earned $3 billion, or 29 cents per share, on revenue of $35.2 billion in the first quarter of 2012.