GE reaffirms guidance, dividend

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NEW YORK (CNNMoney.com) -- General Electric Co. reaffirmed its recently lowered earnings outlook Tuesday and stood by its decision to pay an annual dividend despite the challenges facing its financial services unit.

The diversified industrial, finance and media conglomerate expects to earn between $1.78 and $1.84 per share for the full year. Earnings in the fourth-quarter are expected to be between 50 cents and 52 cents per share.

Two weeks ago, GE lowered its fourth-quarter earnings outlook to that range from its previous outlook of 50 cents to 65 cents per share.

In addition to its earnings forecast, the company said it will pay a dividend of $1.24 next year, which is consistent with its 2008 dividend payment.

Paying a dividend is a "culturally important part of the company," said GE Chairman and Chief Executive Jeff Immelt at the company's annual investor outlook meeting.

Analysts have questioned GE's commitment to paying an annual dividend given the weak economy and the challenges facing the company's financial services business.

But Immelt said the company has sufficient capital to continue paying the dividend while maintaining its triple-A credit rating. GE's triple-A rating keeps the company's borrowing costs lower and gives it a significant advantage over its competition.

"We've put a stake in the ground and said [the dividend payment] is an important way to allocate capital in this cycle," he added. "It demonstrates the strength of the company."

GE (GE, Fortune 500) also said it will no longer provide specific quarterly earnings-per-share guidance. Instead, the company will offer a "full-year operating framework" with detail in the industrial and financial businesses.

GE expects its industrial business to grow 0% to 5% in 2009. The company's financial services unit, GE Capital, is expected to bring in $5 billion in 2009.

"We expect the difficult market conditions to continue in 2009," said Immelt. But GE has taken a number of "decisive actions" to cope with the difficult economic environment, he added.

"Our financial services businesses, while slowed by the current financial crisis, are strong, global, middle-market franchises with a conservative originate-to-hold model backed by senior secured collateral."

Immelt warned that GE Capital will have losses but he argued that its small size gives it an advantage over more traditional banks.

He added that GE Capital has less exposure to consumer debt than banks, which reduces the risk the company faces. And GE Capital has more overseas exposure, which Immelt says is also an advantage.

Meanwhile, GE expects to profit from additional economic stimulus measures, particularly spending on infrastructure, that have been called for by President-elect Barack Obama.

Increased investment on alternative energy sources, such as natural gas and wind, are other assets that GE is banking on.

"We are well-positioned in the right technologies," said Immelt. The shift toward natural gas and wind energy are going to be "big growth drivers," he added.

Shares of the company rose nearly 6% to $17.92.