GENERAL ELECTRIC underlined the depth of the global financial crisis yesterday, announcing its worst quarter in five years and slashing full-year forecasts.
The news, described as "shocking" by a senior GE executive, combined with data showing that US consumer confidence was at a 26-year low to send shares lower, with the S&P 500 down 1.44 per cent at midday in New York.
Shares in GE, which derives more than half its revenues overseas and is seen as a bellwether of the global economy, led the way, falling nearly 12 per cent - its biggest loss since the 1987 stock market crash.
The results are a blow to Jeffrey Immelt, chairman and chief executive, and could increase pressure for action at the group's underperforming financial and healthcare divisions.
The second-largest US company by market capitalisation said profit fell about 20 per cent at its financial services arms, which accounted for more than a third of GE's total revenue in the quarter. Weakness at its healthcare and industrial divisions also weighed on results.
GE executives apologised for reporting the first fall in quarterly profits since 2003, but said their strategy was sound. "The miss is shocking relative to our performance," Keith Sherin, chief financial officer, told the Financial Times. "[ but] we are not going to change our strategy because of a one-time miss".
Mr Immelt presented an upbeat outlook less than a month ago, saying on a webcast that GE would increase earnings at least 10 per cent this year. Yesterday, GE said its profits would grow no more than 5 per cent in 2008.
Fielding hostile questions from analysts, Mr Immelt said the collapse of Bear Stearns days after the webcast, and subsequent market turmoil, prevented GE selling real estate. The group was also forced to take a $270 million writedown on stocks, loans and securitised assets.
Mr Immelt, who succeeded Jack Welch nearly seven years ago, told analysts: "I understand your frustration . . . but I think we've got to look at the totality of the company. We earn a lot more money than we did five or six years ago. We generate a lot more cash. We bought back a lot of stock. And I think the franchise of the company is very strong".
First-quarter profit slipped to $4.36 billion, or 44 US cents a share, from $4.93 billion, or 48 cents, a year ago.
