| Immelt: on a firm wicket (Reuters)
New York, Nov. 22: General Electric cut its profit estimate for 2003 on Thursday and said it would take a $ 2.1 billion charge this quarter to increase reserves at its insurance division.
But the companyís stock rose 8.2 per cent as investors discounted the charge, which had been expected, and focussed on General Electricís plans to raise its dividend and its optimistic projections for several divisions.
Jeffrey R. Immelt, General Electricís chairman and chief executive, offered the estimates at a conference for analysts in New York. In a sign of General Electricís importance to the market, more than 2,500 people listened to a simultaneous webcast of the conference, the company said afterward.
Overall, General Electric said it expected profit growth of 3 to 13 per cent next year, with earnings in a range of $ 1.55 to $ 1.70 a share in 2003. Previously, the company had said it expected to earn $1 .70 a share.
This year, the company expects to earn $ 1.51 a share after the insurance-related charge. The charge will be $ 1.4 billion, or 14 cents a share, after taxes. Eleven of the companyís 13 business units will grow more than 10 per cent next year, General Electric said.
Some sceptical money managers, though, said General Electric had used misleading math to arrive at its profit growth estimate. David C. Frail, a General Electric spokesman, disputed that analysis and said the company considered its estimate accurate.
At the conference, the company said it expected profits in units that are especially sensitive to the economy, including the companyís NBC television network and its plastics division, to rise by more than 20 per cent in 2003, to at least $ 3.1 billion.
Still, General Electric expects only a sluggish economic recovery next year, Immelt said.
Profits at GE Capital, the companyís massive financial unit, which includes insurance and an equipment-leasing business, will rise to at least $ 7.3 billion next year.