Conglomerate General Electric (GE) warned Tuesday that its earnings for the fourth quarter will come in at the lower end of its previously-announced forecast. The firm also revealed changes it was making at its financial services unit, in an effort to defend its top debt rating.
The company, with businesses as diverse as a television network and an airplane engine maker, revealed that it planned to take a charge of at least $1 billion for restructuring in the fourth quarter, as the firm sets itself up to perform in the weak economic environment.
GE said its fourth-quarter earnings are trending toward $0.50 to $0.52 per share, the low end of its previous forecast, which called for a profit between $0.50 and $0.65 per share.
In a conference call, the company did not give a more detailed forecast, saying it was not going to break down its performance by business at this point. This left it unclear what parts of the conglomerate are suffering most in the weak economic climate.
In addition, GE said is looking into restructuring and other charges to accelerate cost out and reviewing losses in the current credit environment. The firm now expects an after-tax charge of $1.0-1.4 billion.
GE said that the restructuring is aimed at setting up the company to better perform in the current economic environment, as well as positioning it for profitable growth in the long term.
GE said it plans to maintain its dividend of $1.24 per share in 2009.
For GE Capital, the company said it is shrinking its portfolio and reducing leverage, as well as diversifying its funding. The company said it was focusing on highest-return business at the financial services unit.
The company reported that it was planning conservatively for 2009, saying it expected market conditions to remain challenging.
The firm also pointed out that it has issued $15 billion of common and preferred stock to accelerate liquidity planning. The firm noted that it has gained access to a couple facilities set up by the government to help companies find liquidity, including the commercial paper facility created by the Federal Reserve.
"GE Capital is an invaluable part of GE's portfolio, and we are fully committed to financial services," GE Vice Chairman and Chief Financial Officer Keith Sherin said in a prepared statement.
"We are taking a number of tough, but prudent actions to make GE Capital safer, stronger and more secure during this financial crisis. We are committed to being a Triple-A company," Sherin said, referring to the fact that its debt has the highest possible rating at triple-A. This is the same rating given to debt backed by the U.S. government and gives GE lower borrowing costs.
In response to GE's announcement, Moody's, an investment rating firm, reaffirmed the company's triple-A debt rating.
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June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.