GE Says Economy Has Stabilized
April 28, 2010 - 1:08 PMGeneral Electric Co. said Wednesday that the broader economy and its own industrial and lending businesses are improving, signs the "clouds are breaking" after one of the worst years ever for the company.
Some key economic indicators have stabilized, including the high unemployment rate and the decline in housing prices, GE told investors at its annual meeting in Houston. Bank losses have stopped growing and capital markets have improved, a positive sign for GE's troubled GE Capital lending unit that has been the source of many of its problems.
"The forecast ahead of us is promising," said GE chief executive Jeffrey Immelt.
GE is frequently seen as an economic indicator since it is has a major presence in sectors ranging from transportation to finance and employs more than 300,000 people in dozens of countries.
GE suffered through a painful year in 2009, as the recession sapped demand for its products ranging from jet engines to wind turbines while the financial crisis led to a big spike in losses on loans GE Capital made for mortgages, credit cards and commercial real estate. The company cut its dividend, lost its top credit rating and saw its stock price swoon.
But the company said GE Capital is improving and should return to profit growth soon.
Losses have peaked and the quality of the unit's assets has improved, according to GE chief financial officer Keith Sherin. GE is quickly shrinking the size of GE Capital to lessen its reliance on the division that once made up half of the conglomerate's profit.
GE expects overall profits to remain relatively flat in 2010 before growing again in 2011.
The company hopes that its big industrial divisions will help it claw out of the recession. It is focusing on areas such as health care, where it makes medical diagnostic tools like sonograms, and its energy efficiency products for power grids as a source of growth.
GE shares rose 29 cents to $18.99 in Wednesday afternoon trading.
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