General Electric underlined the depth of the financial crisis on Thursday, issuing its second profit warning of the year and announcing drastic moves to conserve cash, cut debt and reduce its reliance on its financial services division. The US conglomerate, which warned that US economic woes were spreading to the corporate sector, will halt share buy-backs, scrap the sale of its credit card unit and hold its dividend steady in 2009 – for the first time in 32 years – as the credit crunch takes its toll on GE Capital. GE shares were up more than 4% in New York at midday on investors’ relief that it had aired the bad news without springing a negative surprise on the market, as it did in the first quarter. The market turmoil and the freeze in capital markets had raised investor concerns over GE’s ability to maintain its top-notch triple A credit rating – the cornerstone of its financial strength. GE said writedowns of up to $500m and rising credit losses in the third quarter would reduce annual earnings to $1.95-$2.10 per share from $2.20-$2.30 previously. Lex says that while investors may have overreacted to GE’s problems, CEO Jeff Immelt is nevertheless is “in for a bumpy ride”.

This entry was posted by Gwen Robinson on Friday, September 26th, 2008 at 5:33 and is filed under Capital markets. Tagged with ge, jeff immelt. Edit this entry.