by Lynn Shapiro
, Writer | January 28, 2009
General Electric Company, ending one of the worst years in the company's 117-year history, posted a 44 percent drop in fourth quarter earnings.
Chief executive officer, Jeff Immelt said he expects the rest of this year to be "extremely difficult," but added he was committed to paying investors the full dividend of $1.24 a share this year. "The dividend provides our investors with a solid return in this uncertain time," Immelt told investors at a conference call on Friday.
For the quarter ended in December, the Fairfield, CT, company said its net profit dropped to $3.7 billion, or 35 cents a share, from $6.7 billion, or 66 cents a share, earned in the final three months of 2007.
Sales fell 5% to $46.2 billion, due to the stronger U.S. dollar and slower growth in most of GE's divisions, including GE Healthcare.
At its consumer and industrial products segments, which include its healthcare business, quarterly profit plunged 86% to $36 million with sales down 17% to $2.7 billion. A bright spot for GE was its energy infrastructure business, where earnings climbed 11% to $2 billion. Fourth quarter sales for the unit increased 21%, to $11.4 billion.
The primary source of trouble for GE was its financial unit, GE Capital, which posted a steep decline in fourth-quarter profit, down 67% to $1 billion. Revenue slid 17% to $14.8 billion.
While Immelt vowed to maintain the company's full dividend, saying the company had sufficient cash flow to do so, many on Wall Street fear GE might be forced to cut the generous payout, or lose its triple-A debt rating.
On Jan. 13, Moody's Investors Service lowered its outlook for GE to negative from stable, following a move by Standard & Poor's in December. A negative outlook means the company has a 33% chance of a credit downgrade within two years, leading to higher debt-related costs.
Immelt tried to assuage skittish investors by saying that "we have positioned GE to perform through this cycle and return to double-digit growth in a post recession economy."
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