General Electric Co said profit fell by almost half, on a deeper drop in revenue than Wall Street expected, as the slump that has gripped its finance and media businesses took hold of its heavy industrial units.

Shares of the U.S. conglomerate fell 3.7 percent in premarket trading after it posted a 17 percent revenue drop, exceeding the 10 percent decline analysts expected. Earnings topped estimates as cost-cutting and growth in the company's high-margin services business paid off.

Profit was down at all GE's businesses except its energy infrastructure unit, which makes electricity-producing turbines and gear used in oil and gas production.

Hitting the bottom line number was pretty good news, but that top line revenue, that's a big miss, said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which owns GE shares. That was definitely disconcerting.

The Fairfield, Connecticut-based company has stopped giving per-share profit forecasts and instead provides a framework of how it expects its individual units to perform.

Chief Executive Jeff Immelt told investors on a conference call that the company's outlook had not changed significantly. Unemployment, capex, commercial credit remain challenging, he said.

For the year, Wall Street forecasts a profit of 99 cents per share, a drop of almost half.

PROFIT DOWN 47 PERCENT

GE's second-quarter net income fell to $2.67 billion, or 24 cents per share, from $5.07 billion, or 51 cents per share, a year earlier.

Profit from continuing operations came to 26 cents per share. On that basis, analysts on average had looked for 24 cents, according to Reuters Estimates.

Revenue fell 17 percent to $39.08 billion. Factoring out fluctuating exchange rates, it would have fallen 12 percent.

Profit tumbled 80 percent at the company's GE Capital unit and 41 percent at its NBC Universal media business. Its energy unit recorded a 13 percent increase in earnings.

GE's size and the scope of its operations -- which range from commercial lending to building railroad locomotives to running the NBC television network -- make it a bellwether of the world economy, which is experiencing a brutal recession.

The actual earns number looks pretty good, but revenues were a little lighter than Wall Street expected, said Russell Croft, portfolio manager at Croft-Leominster in Baltimore, which owns GE shares. In a tough environment, it looks like a pretty good quarter.

GE Capital has cut its exposure to commercial paper -- a short-term debt market that briefly locked up last fall -- to $50 billion, from $72 billion at the end of 2008. It has also raised its Tier 1 common ratio, a measure commonly applied to banks, to 7.4 percent from 5.7 percent at the year's end.

GE said its backlog of equipment sales and service contracts held roughly steady at $169 billon, while order cancellations totaled less than $100 million. It has counted on service revenue -- money it receives for maintaining equipment it has already sold -- to help offset declining demand for new purchases of large, pricey equipment like jet engines.

SHARES SLIDE

Shares declined 46 cents to $11.94 in premarket trading, following a five-day streak of gains.

GE shares have fallen about 24 percent so far this year, a much sharper decline than the 1 percent slide of the Dow Jones industrial average <.DJI>.

The last 17 months have been a rough stretch for GE investors, who have seen profits tumble, management cut the quarterly dividend by 68 percent and Moody's Investors Service and Standard & Poor's strip the company of its top-tier AAA credit ratings.

GE kicks off a string of earnings reports from major U.S. industrials. Fellow blue chips Caterpillar Inc, United Technologies Corp and 3M Co report next week.

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

(Additional reporting by Nick Zieminski, Ryan Vlastelica and Ellis Mynandu in New York, Simon Falush, Harpreet Bhal, Atul Prakash and Joanne Frearson in London; Editing by Derek Caney and Steve Orlofsky)

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