GE Profit Drops as Expected, Finance Unit a Drag

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Global Markets Fuel Concern Over Economy

Global stock markets continue to fall as Japan's main stock index plummeted nearly 10 percent Friday. European indexes followed suit, with main exchanges down from 7.5 percent in London to nearly 10 percent in Germany and France. In the U.S., President Bush made a statment on the crisis in the credit markets that has caused widespread sell-offs on Wall Street.

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Noting that the Fairfield, Connecticut-based company spends $15 billion to $20 billion a year on raw materials, Immelt said easing costs "could help us buffer our margins" in the future."

The strongest growth came at GE's energy infrastructure unit, where earnings rose 31 percent. Technology infrastructure, including health care, rose 2 percent.

Profit at its NBC Universal media unit jumped 10 percent, but earnings at the consumer and industrial arm -- which the company aims to spin off to shareholders -- tumbled 82 percent.

COMMERCIAL PAPER 'IMPROVING'

The company has had no problems turning over its short-term commercial paper debt, but still aims to reduce its reliance on that method of financing from $88 billion at end of the third quarter to $80 billion by the end of the year, executives said.

"We really see the CP market improving right now," Immelt said. "We've had no problems with CP."

GE said it would keep its annual dividend steady at $1.24 per share next year.

The company said profit at its GE Capital unit would be down 20 percent to 30 percent in the fourth quarter. It offered no specific 2009 forecast, but plans to provide investors with those targets on December 16.

"The sigh of relief is going to last about five minutes," said Brian Langenberg, principal at Langenberg & Co. "It's still about what's going on in the world and the fact they have a lot of finance. Bank stocks were already decimated and now the insurance stocks are starting to cave, and even though these guys aren't insurance anymore if you have a lot of finance that hurts you."

Earlier this month, GE sold an additional $15 billion in shares -- including $3 billion to billionaire investor Warren Buffett's Berkshire Hathaway Inc (BRKa.N).

GE shares were up 49 cents at $19.50 on the New York Stock Exchange, above a session low of $18.40. The shares now trade at less than half their level when Immelt took the helm in September 2001.

So far this year, the company's shares have lost 48 percent of their value, a steeper drop than the 37 percent slide of the Dow Jones industrial average (.DJI).

(Additional reporting by Nick Zieminski and Ryan Vlastelica in New York; Editing by Derek Caney)

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