General Electric's GE earnings for the first quarter were largely in line with our expectation, excluding the tax benefits flowing through GE Capital. For the past few quarters, the company has been riding the back of energy infrastructure, and this quarter's results showed much of the same. Surprisingly, aviation increased revenue and profit 12% and 39%, respectively. Given the weakness in the economy and project delays at Boeing BA and Airbus, we expected weaker numbers in this group. As impressive as energy and aviation were, the rest of the segme nts were equally unimpressive. Consumer and industrial and NBC Universal continued to take the brunt of the recession with a combined profit drop of 50%. These two segments are highly dependent on a strong consumer, so we expect the weakness here to persist until employment picks up and people begin buying houses again. While it is true that GE Capital earned $1.1 billion in profit for the quarter, all of the profit came from a tax benefit of $1.2 billion. Pretax, preprovision income was down 45% to $2.2 billion from $3.9 billion last year, reflecting the shrinking size of GE Capital's balance sheet and fewer financing transactions in the broader market. The results for the quarter were not stellar, but do show that GE's portfolio of businesses has held up far better than others thus far. We are comfortable with our fair value estimate and assumptions.
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