General Electric Co posted a profit that beat Wall Street's view, but its shares fell 4 percent after weak revenue and declining orders made investors worry about the strength of its turnaround.

The largest U.S. conglomerate said on Friday it had put the worst of the downturn behind it, particularly at its hefty finance arm, and said it expected profit to rise through the rest of 2010 after falling 32 percent in the first quarter.

That amounted to calling an end to a two-year slump that shook investor confidence in the sole original member remaining in the Dow Jones industrial average.

Shares of the world's biggest maker of jet engines and electricity-producing turbines have more than tripled from the 18-year lows they plumbed in March 2009. But Friday's decline suggests Wall Street will need to see stronger signals of top-line growth to drive the shares higher, investors said.

If we get a quarter where the actual revenue line starts to expand, then the stock will get a second wind, said Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, Ohio, which owns GE shares. To get the stock higher from here, you have to have belief. Right now there is a lot of disbelief.

Management of the Fairfield, Connecticut-based company said GE's core markets were showing signs of recovery and that the biggest risk remaining at GE Capital -- its large portfolio of commercial real estate -- was manageable.

Our environment continues to improve. We saw some encouraging signs in places like revenue passenger miles and losses declining in GE Capital, said GE Chief Executive Jeff Immelt, who has engineered a major shift in GE's portfolio of businesses. The steps have included pruning the finance arm and agreeing to sell a majority stake in NBC Universal to No. 1 U.S. cable operator Comcast Corp. We've got better margins and strong cash flow, he said.

GE disclosed a 24 percent drop in orders for new energy equipment and a 21 percent drop in orders for new aviation equipment, with overall orders down 8 percent. The overall pace of decline in new orders has slowed for the past few quarters.

I'm not seeing a big pickup in orders here so I'm a little bit concerned about the pace of activity, said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which holds GE shares in its portfolios.

PROFIT TOPS STREET VIEW

GE, which also sells wind turbines and loans money to mid-sized businesses, reported net income attributable to common shareholders of $1.87 billion, or 17 cents per diluted share, down from $2.75 billion, 26 cents a share, a year ago.

Profit from continuing operations came to 21 cents per share, above the 16 cents analysts had expected on average, according to Thomson Reuters I/B/E/S.

Revenue declined 5 percent to $36.6 billion. That was less than the $37.1 billion analysts had forecast.

GE said its total order backlog -- an indicator of future sales -- held steady at $174 billion.

This is the low water mark for the year, for the cycle. They're delivering, said Keith Goddard, president of Capital Advisors Inc in Tulsa, Oklahoma, which owns GE shares. You're finished worrying where's the bottom in GE's earnings power.

PROPERTY LOSSES 'MANAGEABLE'

GE Capital, which invested heavily in commercial real estate, turned out to be the company's Achilles' heel during the downturn, and the company aims to cut it back to produce just 30 percent to 40 percent of overall profit, rather than the more than half it represented before the recession.

The unit recorded a 41 percent operating profit decline in the quarter, with every segment of that business except for its real estate arm making money.

The GE Capital losses seem to have peaked and commercial real estate losses are manageable, Immelt told investors on a conference call.

GE also said that officials with the U.S. Securities and Exchange Commission had asked for further information related to some comments the company had made in 2008 about its liquidity, during the worst of the global credit crisis.

GE shares fell 80 cents to $18.70 in afternoon trading on the New York Stock Exchange, still over triple the 18-year lows they tested in March 2009. They have risen approximately 68 percent over the past year, outpacing the 40 percent rise of the blue-chip Dow Jones industrial average.

GE's competitors include a broad lineup of some of the world's largest businesses, including Germany's Siemens AG, French industrial group Alstom SA and Swiss engineering firm ABB Ltd.

GE kicks off a wave of earnings reports from top U.S. industrials, with United Technologies Corp, Eaton Corp and Honeywell International Inc all due to report over the coming week.

(Additional reporting by Nick Zieminski and Edward Krudy in New York and Jon Hopkins, Brian Gorman, David Brett and Dominic Lau in London, Blaise Robinson in Paris; Editing by Derek Caney and Tim Dobbyn)

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