General Electric (GE) announced today that second-quarter 2009 earnings fell a smaller than expected 47%, as earnings from energy equipment somewhat offset declines in finance, health care and NBC Universal arms.

Profit from continuing operations was $2.9 billion. Revenue from continuing operations was down 17% to $39.1 billion. The results beat analyst earnings estimates,  but were below the top line estimate of $42.16 billion, according to AOL Daily Finance. 

“In a global economic environment that continues to remain challenging, GE delivered solid second-quarter business results,” GE Chairman and CEO Jeff Immelt said. But what Immelt calls solid and what the results show may not satisfy investors as the declines were widespread across many segments, and the good news kept being “offset” — a word that starred in the report — by less than stellar news.

Segment profit fell 36% compared with the second quarter of 2008 as 13% growth at Energy Infrastructure and solid growth at Cable were more than offset by:

  • An 11% decline in Technology Infrastructure earnings due to softened demand and pricing pressure in Healthcare and Transportation.
  • An 80% decline at Capital.
  • A 41% decrease at NBC Universal. 

The top line suffered, too, with GE Capital Services’ (GECS) revenues falling 29% to $13.4 billion, and industrial sales down 7% to $26 billion.

Investors’ main concern was GE Capital. As mentioned, revenue declined 29% in the second quarter and Capital Finance profit plunged 80% in the quarter to $590 million. Breaking down the segments, real estate revenue fell a larger-than-expected 48% from nearly $2 billion to $1 billion in the quarter. The real estate division lost $237 million, compared to a profit of $484 million in the same quarter last year.

“In a difficult environment, we are ahead of schedule on our plan to create a more focused financial services company. Capital Finance remains on track to be profitable for the full year,” Immelt said. Loan volume was 25% higher than the prior quarter, even as it continues to reduce its balance sheet. Borrowing by GE’s finance arm has been high thanks to its eligibility for the Temporary Liquidity Guarantee Program, which it used more than any other firm.

Cash flow was another concern investors had as the company has more retirees than employees. At least here, the offset was to the positive side as strong working capital improvements more than made up for declines in progress payments, leading to results ahead of operating targets. Cash generated from operating activities totaled $7.1 billion, ahead of plan.

Recently, with CIT Group (CIT)’s collapse, many have compared it to GE Capital because of the mix in its loan portfolio. However, analysts think the problems at CIT could actually be a boon to GE Capital, as it can lure customers away and in the event of its bankruptcy, even raise rates. It’s not clear how this would mesh with GE’s strategy of shrinking GE Capital to 30 percent of total profits from around 50 percent in the past.

In recent pre-market trading, GE stock traded 1.5% lower, reflecting concerns arising from the difficulties shown in the report despite Immelt’s assertion that “We continue to position GE to win in a reset economy.”