By Scott Malone
BOSTON (Reuters) - General Electric Co
Its shares rose 2.3 percent in premarket trading.
The U.S. conglomerate now expects quarterly earnings of 50 cents to 52 cents per share, compared with its prior guidance of 50 cents to 65 cents per share. Wall Street analysts, on average, had looked for profit of about 51 cents per share, according to Reuters Estimates.
"Obviously the macro environment remains very challenging," said Keith Sherin, GE's chief financial officer, in a briefing with investors. "We know that we have to reduce our cost structure in this environment."
The company said it expects to take $1 billion to $1.4 billion in after-tax charges related to restructuring.
Profit at GE has fallen about 12 percent this year, largely due to troubles at GE Capital, which has been hard hit by the credit crunch and recessionary conditions in the United States and parts of Europe.
The company stunned investors in April with an unexpected drop in quarterly earnings and again in September lowered its profit target for the year.
It is considering unspecified job cuts at both its GE Capital finance unit and across its industrial units, which make products ranging from jet engines to refrigerators.
GE Capital expects to earn about $5 billion next year, down from a targeted $8 billion this year, the company said. It expects the finance business to return to double-digit earnings growth in 2010.
The Fairfield, Connecticut-based company aims to lower the leverage ratio of its GE Capital unit to six to one next year, from a seven-to-one target this year. To do that it is considering moving about $5 billion in capital into that business, with the funding coming from the $15 billion the company raised earlier this year in a stock offering, Sherin said.
"Safety first is really how we're thinking about the business," said Mike Neal, CEO of GE Capital. "We're in a very difficult credit cycle right now."
GE plans to reduce its outstanding commercial paper to $50 billion next year. That's down from $88 billion at the end of the third quarter.
GE shares rose 36 cents to $15.86 in premarket trading, from a $15.50 close on the New York Stock Exchange. As of Monday's close, they were down 58 percent for the year, a steeper slide than the 39 percent fall of the Dow Jones industrial average <.DJI> and the 44 percent tumble of the Standard & Poor's 500 index <.SPX>.
(Reporting by Scott Malone, Editing by Maureen Bavdek, Dave Zimmerman)
