GE profit falls 46%, meets analysts' lowered expectations

WASHINGTON -- The news caps a difficult year for one of the world's largest companies. Its businesses touch on most sectors of an economy mired in a recession, from lightbulbs and TV stations, to jet engines. And its longtime profit engine, GE Capital, has seen profit tumble as the slowdown forces business and consumers to limit borrowing or default on loans.

And although the company reaffirmed plans to both pay its $1.24 dividend and defend its top "AAA" rated credit on Friday, its shares fell more than 5% in midday trading as investors worried they were vulnerable.

"The environment in total is very tough," GE's Chief Executive Jeff Immelt told analysts on the company's conference call.

GE reported earnings of $3.65 billion, or 35 cents a share, after paying preferred dividends. That was down from $6.7 billion, or 66 cents a share, a year earlier.

Results included $1.5 billion in charges related to the restructuring of GE Capital and increased reserves. The company also recorded $1.38 billion in tax benefits during the quarter.

GE's earnings from continuing operations before preferred dividends matched the diminished Wall Street expectations of 37 cents a share, according to analysts polled by Thomson Reuters.

Quarterly revenue slipped 5% to $46.2 billion.

"While GE clearly is being impacted by recession and its financial business is being impacted by the financial meltdown, they are navigating it," said David Katz, chief investment officer of Matrix Asset Advisors. "They are getting through, they are earning money through it."

The company is preparing for what should be a difficult 2009 as it pares down GE Capital, reduces its dependence on risky debt and tries to maintain growth on its industrial side as the recession worsens.

But the company, the only original member to remain in the Dow Jones industrial average, stood by its 2009 outlook.