GE Cuts Earnings Forecast

The Fairfield, Conn., conglomerate said it expects third-quarter earnings of 43 cents to 48 cents a share, down from its July forecast of 50 cents to 54 cents a share. It also lowered its forecast for the full year, to $1.95 to $2.10 per share, from an already reduced $2.20 to $2.30. That translates into as much as $2 billion less profit for the year. It marked the first time since 2002 that GE lowered financial projections ahead of its quarterly earnings release. The downturn in GE's financial business appears to have several causes: consumers who are slower to pay their bills, businesses who may have trouble repaying loans and declines in the commercial-real-estate market. Chief Financial Officer Keith Sherin said GE may have trouble completing some real-estate sales in the third quarter. The company plans to reduce its commercial-real-estate holdings to "below $80 billion in 2009," from about $90 billion today. "It's performing well," he said. "But the size is something investors have expressed concerns about." To preserve capital at its financial business, GE said it would reduce the share of profits that the unit hands over to the parent company. GE also said it would curb long-term and short-term borrowing at the finance unit, suspending plans to sell $10 billion in long-term debt in the fourth quarter and reducing sales of short-term commercial paper to less than 15% of the unit's debt.