Profit to be at low end of guidance

General Electric Co. said it expected fourth-quarter earnings to be near the low end of its guidance and will take a charge of as much as $1.4 billion as it starts to shrink its struggling GE Capital finance arm next year because of the ongoing credit crisis.

The diversified industrial, finance and media conglomerate said it expected 2009 to be a difficult year for GE Capital, which provides a variety of commercial and consumer loans and has been battered by the global economic downturn. GE laid out plans to reduce the finance unit’s exposure to the turbulent debt markets as it restructured next year.

GE Chief Financial Officer Keith Sherin said the company was also weighing job cuts in both its financial and industrial divisions as part of cost-cutting measures, but did not provide details.

Investors cheered what was viewed as a commitment by GE to shore up GE Capital, which has been hammered by turmoil in the credit markets. GE also said it still expected to pay a dividend of $1.24 a share in 2009 despite the sour forecast.

Company shares jumped $2.11, or 13.6%, to $17.61.

The Fairfield, Conn.-based conglomerate’s properties are as varied as aircraft engine manufacturing and the NBC television network.

GE now expects to earn 50 to 52 cents a share in the fourth quarter, at the bottom of its previous guidance of 50 to 65 cents. The consensus of analysts polled by Thomson Reuters was 51 cents a share.

The company probably will also take a charge of $1 billion to $1.4 billion in the quarter. GE plans to give greater details on its outlook Dec. 16.

But the company did present a grimmer forecast for GE Capital, which has accounted for about 40% of GE’s overall earnings. Next year, that share should drop to around 30%, as earnings fall from an expected $9 billion this year to around $5 billion in 2009. GE said it expected GE Capital’s earnings to begin growing again in 2010.