| | GE shares tumble after prune in profit forecast |
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CreateTime:2008-09-26 Editor:liaoyan
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GENERAL Electric Co has reduced its annual profit forecast for the second time this year and suspended its stock buyback because of "unprecedented weakness and volatility" in the financial markets.
Full-year earnings will be US$1.95 to US$2.10 a share instead of the earlier projection of US$2.20 to US$2.30, GE said yesterday in a statement.
The world's fourth-largest company by market value fell yesterday in early New York trading.
Chief Executive Officer Jeffrey Immelt said the steps will bolster GE's financial businesses, which accounted for more than half of its profit last year, and help maintain its dividend and AAA credit rating.
Immelt first cut the company's profit forecast on April 11, triggering the stock's biggest one-day decline since 1987.
"Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend," Immelt said in the statement.
GE claimed that market conditions weren't "likely to improve in the near future," according to Bloomberg News.
The GE board voted to maintain GE's 31-cent quarterly dividend for investors through the end of 2009, meaning next year would be the first in more than three decades without a dividend boost.
"We think it's prudent for GE to not raise its dividend and begin to de-leverage" its finance businesses, according to Joel Levington, director of corporate credit for Hyperion Brookfield Asset Management in New York.
GE, whose businesses reflect a swath of the United States economy, from jet engines to healthcare and the NBC television network, dropped US$1.61, or 6.5 percent, to US$23.34 yesterday in the New York Stock Exchange. The company's shares have lost 34 percent of their value this year.
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