General Electric Co. said Tuesday it expects fourth-quarter earnings to be near the low end of its guidance and will take a charge of up to $1.4 billion as it starts to shrink its struggling GE Capital finance arm next year because of the ongoing credit crisis.
The diversified industrial, finance and media conglomerate said it expects 2009 to be a difficult year for GE Capital, which provides a wide range of commercial and consumer loans and has been battered by the global economic downturn.
GE Chief Financial Officer Keith Sherin said the company is weighing job cuts in both its financial and industrial units as part of cost-cutting measures, but did not provide details.
"This will really help us position for a tough 2009," Sherin said of the restructuring efforts during a conference call with Wall Street analysts.
Company shares jumped $1.49, or 9.6 percent, to $16.99 in morning trading.
The Fairfield, Conn.-based conglomerate's properties range from aircraft engine manufacturing to the NBC television network.
GE now expects to earn between 50 cents and 52 cents per share in the fourth quarter, at the bottom of its previous guidance of 50 cents to 65 cents per share. The company will also like take a charge of between $1 billion to $1.4 billion in the quarter. GE plans to give greater details on its outlook on Dec. 16.
However, the company did present a grimmer forecast for GE Capital, which has composed about 40 percent of GE's overall earnings. Next year, that share should drop to around 30 percent, as earnings fall from an expected $9 billion this year to around $5 billion in 2009. GE said it expects GE Capital's earnings to begin growing again in 2010.
GE said it still expects to pay a dividend of $1.24 per share in 2009.
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