GE profit down 44 percent, CEO stands by dividend

BOSTON (Reuters) - General Electric Co reported a 44 percent drop in quarterly profit on weakness at GE Capital and its lighting and appliance units, and warned that 2009 would be "extremely difficult."

Despite meeting Wall Street's lowered estimates, earnings at GE Capital -- its Achilles heel for the past year -- tumbled 67 percent. GE's energy infrastructure unit, which makes electric turbines and windmills, was the highlight, recording 11 percent profit growth.

Chief Executive Jeff Immelt said on Friday the result -- which met Wall Street's expectations -- reflected brutal economic conditions.

"We're planning for a really tough environment," Immelt told analysts on a conference call. "The recession is tough, the financial services crisis is worse."

Investors have become increasingly concerned over the past month that the world's largest maker of jet engines and electric turbines may have to sacrifice its $1.24 per share annual dividend.

Analysts are also asking whether it could lose its coveted top-tier credit rating, after Standard & Poor's lowered its outlook to "negative" in December.

"GE is not fully out of the woods and macro uncertainties continue to point to continued risk for the dividend and AAA-rating," said Goldman Sachs analyst Terry Darling.

The 52-year-old Immelt defended the dividend, calling it "a good return to investors in this moment of uncertainty. But we're not straining in order to pay it ... We've got lots of cash."

GE shares fell 5 percent, or 68 cents, to $12.80 on the New York Stock Exchange.

MEETS FORECAST, MAINTAINS OUTLOOK

The Fairfield, Connecticut-based company reported a fourth-quarter profit of $3.72 billion, or 35 cents per diluted share, compared with $6.7 billion, or 66 cents, a year earlier, as the U.S. conglomerate and economic bellwether closed out one of the toughest years in its 117-year history.

Factoring out one-time items, results met Wall Street's expectations, according to Reuters Estimates.

Revenue fell 4.8 percent to $46.21 billion.

In early December, the company sharply lowered the high end of its fourth-quarter profit forecast.

"While GE clearly is being impacted by recession and its financial business is being impacted by the financial meltdown, they are navigating it," said David Katz, chief investment officer, Matrix Asset Advisors. "They are getting through, they are earning money through it."

The company, the only original member to remain in the Dow Jones industrial average, stood by its 2009 outlook.

GE has ceased providing numeric per-share profit targets, instead opting to spell out a "framework" for how its individual businesses will perform. That calls for profit at its infrastructure units and its NBC Universal unit to be flat to up 5 percent, with GE Capital profit down about 40 percent.

Company officials on a conference call said they raised their forecast credit losses at GE Capital to $10 billion for the year, up from a previous forecast of $9 billion. They also noted that infrastructure equipment orders -- an indicator of future sales -- declined 11 percent in the quarter.

Across the industrial sector, companies are braced for a rough year. United Technologies Corp, the world's largest maker of elevators and air conditioners, on Wednesday warned that it expected a particularly brutal first half.

The company has said it would cut jobs across its operations this year, but has not given an overall target for reductions. It employs more than 300,000 people worldwide.

GE is trimming back its finance arm, which accounted for about half of its profits in 2007. The company aims to rely on GE Capital for 30 percent of its profits, with 10 percent from NBC Universal and 60 percent from its core industrial units.

Over the past year, GE shares have tumbled about 60 percent, erasing some $200 billion in market capital, and sharply outpacing the 32 percent fall of the Dow Jones industrial average.

(Reporting by Scott Malone, additional reporting by Rebekah Curtis, Dominic Lau and Atul Prakash in London and Christoph Steitz in Frankfurt, Nick Zieminski and Leah Schnurr in New York; Editing by Derek Caney)