The maker of jet engines, power plants and other industrial equipment also reported a negative $1.6 billion (1.25 billion pounds) in cash flow from industrial operating activities compared with a negative $600 million it expected for the quarter due to a $1.3 billion increase in working capital and the timing of bills to customers.
Investors have been watching cash flow as an indicator of GE's operating performance, and GE said it still expects to hit its cash target of $12 billion to $14 billion for the full year.
Shares were down 1.7 percent at $29.75 in mid-morning trading, making it the biggest decliner on the Dow Jones Industrial Average.
The stock has outperformed the sector in recent weeks and that could make the shares "less favorable in the current risk-on market," said Deane Dray, analyst at RBC Capital markets.
The company also raised concern by giving itself wiggle room to deliver fewer LEAP aircraft engines this year, a key risk for the company. It said the range for the year was 450 to 500 engines, instead of nearly 500 it stated earlier.
"It is notable that GE is taking a more cautious slant by backing away from a firm target of "500" engine deliveries in 2017," Vertical Research Partners analyst Rob Stallard said.
GE beat analysts estimates for adjusted earnings and revenue, even though revenue fell 1 percent to $27.66 billion, due to lower sales in its oil-and-gas and lighting businesses. Analysts expected $26.26 billion, according to Thomson Reuters I/B/E/S.
Adjusted earnings of 21 cents a share were unchanged from a year ago and beat analyst estimates of 17 cents, according to Thomson Reuters I/B/E/S.
GE said industrial organic revenue, which is from continuing businesses, rose 7 percent in the quarter, a strong showing according to analysts.
Chief Executive Officer Jeff Immelt noted a 10 percent rise in quarterly orders and said the world economy was "an attractive environment for GE."
"We see global growth accelerating, while the U.S. continues to improve," Immelt said on a conference call, adding that growth in China, Southeast Asia, Latin America and Africa this year were all "stronger than last year."
(Reporting by Alwyn Scott in New York and Rachit Vats in Bengaluru; Editing by Sriraj Kalluvila and Bernadette Baum)
By Alwyn Scott