General Electric reported a drop in third-quarter earnings Friday on modestly lower sales, as declining oil and gas income offset gains in other businesses.

GE, which is divesting most of its finance arm, posted net income of $2.5 billion, down 29.1 percent from the year-ago period.

Revenues declined 1.3 percent to $31.7 billion.

Operating earnings from industrial businesses edged up 4.5 percent behind gains in five of seven sectors, including power and water and aviation.

However, oil and gas profits fell 11.5 percent as the downturn in the petroleum industry due to lower commodity prices weighed on results. GE's revenues from oil and gas sank 15.9 percent to $3.9 billion.

Earnings in the year-ago period were boosted by profits from finance operations that are no longer counted.

GE has announced sales of more than $126 billion in assets as it moves to scale back its finance arm to emphasize industrial operations.

Analysts have warned that year-over-year comparisons are difficult at GE because of the major reshuffling of assets.

"Our portfolio transformation is happening at an unprecedented pace," said GE chief executive Jeff Immelt. "We are transforming GE into the world's premier Digital Industrial company."

Earnings translated into 29 cents per share, three cents above analyst estimates.

Shares of GE fell 1.5 percent to $27.62 in pre-market trade.