December 16, 2009 / 12:49 AM / 8 years ago

UPDATE 4-GE sees flat 2010, to invest in core businesses

 * Sees flat earnings across core industrial operations
 * Expects profit down at NBC Universal due to Olympics
 * Acquisition activity would focus on core businesses-CEO
 * Stock down 1 percent
 (Adds investor quotes)
 By Scott Malone
 NEW YORK, Dec 15 (Reuters) - General Electric Co GE.N
GE.N expects to record flat profit across its big industrial
units next year, as a sluggish global economy crimps sales for
jet engines, electric turbines and other heavy equipment.
 The largest U.S. conglomerate believes the worst of the
financial crisis is behind it and is ready to invest in the
core businesses it will retain as it trims back GE Capital and
sells a majority stake in its NBC Universal media arm, Chief
Executive Jeff Immelt told investors on Tuesday.
 "We've positioned the company for solid earnings growth and
cash flow growth in the future," Immelt said. "When we look at
the near term, it's going to take investment, organic
investment, to drive growth."
 He described the outlook for GE's industrial arms as "in a
word, flat."
 That forecast applied across GE's big technology, and
energy infrastructure divisions which include equipment and
services, as well as its appliance and lighting arm.
 The Fairfield, Connecticut-based company is ready for
weaker sales of heavy equipment but expects that to be offset
in part by growing revenue for repairing and maintaining goods
it has already sold.
 GE last year stopped giving Wall Street per-share profit
forecasts, instead providing a "framework" of how it expects
its various units to perform. Last week it told investors it
looks for flat 2010 profit at its GE Capital finance arm.
 Analysts, on average, have expected 2010 profit of 89 cents
per share, compared with forecast earnings for this year of 99
cents per share, according to Thomson Reuters I/B/E/S.
 The company expects operating profit at NBC to decline next
year due to the high cost of broadcasting the Olympics.
 "These guys have flown through the eye of the storm and
come out on the other side," said John Dowling, a portfolio
manager at Golub Group, a San Mateo, California-based company
that oversees about $660 million in assets, including GE
shares. He said the forecast was what he expected and he was
happy GE is refocusing on its core industrial units.
 Some of GE's blue-chip industrial peers last week told
investors they expect to resume profit growth next year, with
heavy cost-cutting beginning to offset the effects of a
still-shaky global economy. United Technologies Corp UTX.N
forecast a 10 percent rise in earnings, while 3M Co MMM.N
looks for an increase of about 9 percent.
 GE shares closed down 1 percent, or 20 cents, at $15.75 on
the New York Stock Exchange.
 The past year has been a tumultuous one for GE, which in
March saw its shares briefly touch 18-year lows among investor
concerns about the direction of its finance unit.
 The sole remaining original component of the Dow Jones
industrial average .DJI was stripped of its top-tier credit
ratings by Standard & Poor's and Moody's Investors Service, cut
its dividend 68 percent and scrambled to trim GE Capital.
 Immelt told reporters GE aims to return its dividend closer
to its prior level, but declined to say when.
 Immelt has been working to scale back GE's finance unit --
its Achilles heel during the credit crisis -- and to focus the
conglomerate back on its heavy industrial core.
 "We've really defined the businesses that we want to be
in," Immelt said in the NBC studio where the "Saturday Night
Live" television program is produced.
 "If we do inorganic growth in the future, it's going to be
in the key domains -- not new platforms," he added.
 GE early this month reached a deal to sell a majority stake
in its NBC Universal media business to No. 1 U.S. cable company
Comcast Corp CMCSA.O. To clear the way for that, it agreed to
buy the stake in NBC held by French media company Vivendi SA
 "We like where they're going in trying to reduce their
exposure to financial services and NBC," said Jim Rudd,
principal and chief executive at Ferguson Wellman, a Portland,
Oregon-based company that oversees about $2.5 billion in
assets, including GE shares.
 The company aims to resume having GE Capital pay a dividend
back to the GE parent company in the next few years even as it
trims back that business, Immelt said.
 "We let it get too big and we got into businesses that
weren't central to the GE core," Immelt said.
 For a recent Reuters Breakingviews column on GE Capital,
click: [ID:nN14207884]
 (Reporting by Scott Malone; editing by Carol Bishopric,
Matthew Lewis, Gary Hill)

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