The company's shares fell nearly 3 percent in morning trading though, because GE failed increase its profit margin as much as it had predicted.
The company's profit for all of 2013 rose, though revenue fell slightly, as GE continues its transformation from a sprawling conglomerate to a more focused industrial company that builds and services complex equipment such as CT-scanners, locomotives and gas-fired turbines.
GE reported that its net income rose 5 percent to $4.2 billion, or 41 cents per share, for the October-December period on revenue of $40.38 billion. That's up from $4.01 billion, or 38 cents per share, on revenue of $39.16 billion in the fourth quarter of 2012.
Adjusted to remove the effects of one-time items and discontinued operations, GE earned 53 cents per share in the latest period. That matches what analysts polled by FactSet expected, on average.
But a manufacturing problem that has affected the quality of some wind turbine blades and poor performance by the company's small energy management division prevented the company from meeting its goal of improving profit margin in its industrial divisions by 0.7 percent. Instead, it improved 0.66 percent.
Christian Mayes, an analyst at Edward Jones, said that failing to hit the profit margin target unsettled investors even though the company hit its earnings and revenue targets. Mayes said GE had implied that the target would be easily hit, and that even if things didn't go perfectly at the end of the year, they'd still be able to reach it.
"They've been telling everyone that was an important target for them and they missed it," said Christian Mayes, an analyst at Edward Jones.
GE shares fell 68 cents, or 2.5 percent, to $26.52 in midday trading Friday.
GE CFO Jeffrey Bornstein said in an interview Friday that the company's biggest goal is to improve industrial profit margins during company's transformation. The target is 17 percent or higher by 2016, up from 15.7 percent in 2013.
"The piece we need to deliver on is world-class operating margins that reflect the fact that we have world-class products and world-class distribution," he said. "This is what we've got the whole company laser-focused on."
For the year, GE net income rose 3 percent to $14.06 billion and revenue slipped less than 1 percent to $146.05 billion. GE has been scaling back its financial division, called GE Capital, and it has shed non-industrial divisions such as NBC Universal. It plans to spin off its large consumer credit card business this year.
GE Capital profit surged 38 percent in the quarter to $2.49 billion, helped in part by the sale of assets in Switzerland.
GE's fourth quarter results were also helped by profit growth of 20 percent or more in its aviation, oil and gas, and appliances divisions.
"We saw good conditions in growth markets, strength in the U.S., and a mixed environment in Europe," GE CEO Jeff Immelt said in a statement.
GE said its backlog - a measure of orders taken but not yet filled - grew to a record $244 billion in the fourth quarter, up $15 billion from the third quarter.