Still, CEO Jeff Immelt said he sees "a slow recovery in a few areas" of GE's diverse industrial businesses, noting that equipment and service orders increased for the first time in two years.
The industrial and financial giant, which makes everything from refrigerators to power plant equipment to jet engines, reported net income of $2.06 billion, or 18 cents per share for the quarter ended Sept. 30. That compares with earnings of $2.49 billion, or 23 cents per share, a year ago.
Excluding $1.1 billion in reserves GE had to add to its Japan consumer finance business, the company earned 29 cents per share, 2 cents above Wall Street estimates, according to a survey of analysts by Thomson Reuters.
But revenue slipped 5 percent to $35.9 billion. That fell short of Wall Street estimates by about $1.7 billion. Investors reacted by sending shares down 2.6 percent in premarket trading.
GE had double-digit profit declines at NBC Universal and its technology infrastructure businesses. The technology business includes the division that makes locomotives. Major railroads put thousands of locomotives in storage during the recession as traffic on their lines fell dramatically. While many of those are back on the tracks, demand for new ones continues to be weak. The company's jet engine business also had lower sales and profits.
Overall, the U.S. manufacturing sector is seeing a more modest pace of growth following a rapid increase in activity when companies rushed to replenish inventories coming out of the recession.
GE's health care business was the only industrial division with a significant profit increase 14 percent. GE makes diagnostic products such as sonograms and MRI machines for doctors' offices and hospitals,
GE Capital, the company's lending arm that suffered huge losses during the financial crisis, saw a year-over-year profit increase from $141 million to $871 million.
GE expects revenues in its industrial division to be flat in the final three months of the year, and its overall order backlog remained steady at $172 billion. But Immelt noted that higher equipment and service orders would help drive company profits next year.
"Third-quarter 2010 results should give investors confidence that a renewed GE should grow earnings and dividends in 2011 and beyond," Immelt said.
GE, based in Fairfield, Conn., has been refocusing its diverse business. It's in the process of selling the company's majority stake in NBC Universal to Comcast for about $14 billion. And earlier this month, GE said it would expand its energy business with a $3 billion acquisition of energy equipment maker Dresser Inc.