GE’s net income falls 46 percent
WASHINGTON – General Electric’s fourth-quarter net income fell 46 percent, in large part because of the struggles of its finance division, GE Capital, according to a story in the Minneapolis Star Tribune.
GE Capital serves the marine industry through its Commercial Distribution Finance division, which provides floor plan lending to boat dealers, among other services.
Year-to-year earnings at GE Capital fell from $3.16 billion to $1.03 billion. GE Capital has joined federal programs to help lenders raise cash, and the company expects its credit losses from bad loans to rise to $9 billion this year, according to the newspaper.
Shares fell 7 percent to $12.54 in morning trading today after the earnings report, it stated.
According to the Tribune, investors worry GE will cut its dividend or lose its prized “AAA” credit rating because of the problems at GE Capital as well as losses in its industrial and entertainment businesses. But the company has reaffirmed plans to both pay the $1.24 dividend and defend the rating.
“We run the company to have a Triple-A credit rating, and we have significantly strengthened our liquidity position,” said Chief Executive Officer Jeff Immelt. “We believe the GE dividend provides our investors with a solid return in this uncertain time.”
GE restructured last year, cutting the size of GE Capital and slashing jobs at the lending unit and on GE’s industrial side. Its industrial units include health care, energy, transportation and consumer products. GE also owns NBC Universal, the parent company of NBC.
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