General Electric Co reported a better-than-expected quarterly profit as strength at its energy equipment business offset falling earnings at its hefty finance arm and the NBC Universal media unit.

The largest U.S. conglomerate posted on Friday a 36 percent drop in net income and warned there are some signs the economy may be continuing to deteriorate.

It forecast that GE Capital would be profitable for the year, but also recorded about $500 million in order cancellations at its infrastructure units, which make products ranging from electricity-producing turbines to railroad engines.

Shares whipsawed throughout early trading, falling as much as 4 percent and rising as much as 1.7 percent.

The economy remains tough, said Chief Executive Jeff Immelt, on a conference call with analysts. There are places where we can still win and we are positioning the company to excel as we come out of this in 2010, 2011 or whenever that takes place.

GE is viewed as a barometer of the economy due to the size and breadth of its operations.

The numbers are showing stabilization in the global economy and in the performance of GE stock, said Jim Hardesty, president of Hardesty Capital Management in Baltimore, which owns GE shares. The result still wasn't good, though.

The Fairfield, Connecticut-based company plans to cut its costs by more than $5 billion this year.

PROFIT TUMBLES

GE's net income attributable to common shareholders fell 36 percent to $2.74 billion, or 26 cents per diluted share, down from $4.3 billion, or 43 cents per diluted share a year earlier.

Analysts, on average, looked for profit of 21 cents per share, according to Reuters Estimates.

Revenue fell 9 percent to $38.41 billion. Its order backlog remained stable at $171 billion.

Profit at GE Capital -- the company's primary weak spot -- fell 58 percent to $1.12 billion.

Profit at the NBC Universal media business fell 45 percent to $391 million on a 2 percent drop in revenue, though company officials noted that reflected higher than normal expenses for broadcasting the Super Bowl and a comparison to a prior year period when television writers were on strike. It said factoring out unusual items profit at the unit would have been down 15 to 25 percent.

GE's Energy Infrastructure unit -- which makes products ranging from gas-fired turbines to solar panels -- notched a 19 percent rise in profit, to $1.27 billion.

Energy Infrastructure has been the backbone of growth for the company, said Daniel Holland, equity analyst at Morningstar in Chicago. Looking at the demand for gas turbines and the fact that we have a good incentive plan for renewable energy in place now, that should keep growth going pretty strong there.

GE has ceased giving numeric per-share profit forecasts, instead providing investors with a framework of how it expects each of its business units to perform this year.

That framework calls for profit to be flat to up 5 percent at its infrastructure arms and flat to down slightly at NBC. In December it forecast that GE Capital would earn about $5 billion this year, though last month it told investors that based on the Federal Reserve's expectations for the U.S. economy, the finance unit's profit could be half that.

We will remain profitable in the year, Immelt said.

During the first quarter, GE cut its quarterly dividend by 68 percent and was stripped of its top-tier AAA credit rating by both Moody's Investors Service and Standard & Poor's.

GE has raised 93 percent of the money it plans to seek from long-term debt markets this year, and will start on its 2010 targets early once it has met its 2009 needs, executives said.

SHARES RISE

Its shares were down 4 cents to $12.23 on the New York Stock Exchange. Over the past 12 months, they are down approximately 63 percent over the past 12 months, a far sharper drop than the 36 percent fall of the Dow Jones industrial average <.DJI>.

GE shares are now trading at about double their 52-week low of $5.86 hit on March 4.

It's not going to double again from here, said Edward Maraccini, portfolio manager at Optique Capital Management in Milwaukee, which owns GE shares. But as long as we see stabilization in results and for the capital position to stop deteriorating, it can definitely start to build off a base.

The cost to insure GE Capital's debt against default declined following the earnings report. It cost $625,000 in an upfront payment plus $500,000 a year in annual premiums to insure $10 million of debt, down from $725,000 at Thursday's close, according to Phoenix Partners Group data.

In heavy equipment, GE's competitors include a lineup of some of the world's largest companies, including Swiss engineering group ABB Ltd , French industrial group Alstom SA and German conglomerate Siemens AG .

(Reporting by Scott Malone, additional reporting by Nick Zieminski, Ryan Vlastelica, Dena Aubin and John Parry in New York and Atul Prakash in London; Editing by Derek Caney)

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