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GE affirms outlook
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September 21, 2001: 2:14 p.m. ET
Sees double-digit earnings growth in '01, '02 despite terror attacks
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NEW YORK (CNNfn) - General Electric, one of the premier U.S. growth companies of the last decade, said Friday it expects to withstand the effects of last week's terrorist attacks and post double-digit earnings growth in 2001 and 2002.
Shares of GE, one of the world's biggest companies and a Dow component, jumped $1.43 to $31.80, helping the Dow Jones industrial average erase some of its sharp, early losses.
But the Dow's gain, which followed a 1,173.06-point loss since trading resumed Monday, was short-lived. The Dow returned to negative territory by late morning, and at 3:00 p.m. ET was down 175.26 at 8,200.95.
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Speaking at his first meeting with analysts since taking the helm two weeks ago, CEO Jeffery Immelt said that after the terror attacks of Sept. 11, it expects to post earnings per share of $1.41 in 2001, compared with its previous expectation of $1.45 a share. GE lost millions in advertising revenue as its NBC unit broadcast for several days without advertising. Its airline services businesses will also take a hit from the crisis in the airline industry.
Immelt also commented on the broader U.S. economy, saying that "2001 was a terrible year, and 2002 is going from bad to worse."
The company, along with dozens of others, has been aggressively buying back shares this week in an effort to boost confidence. "I think we look like a damn good bargain today," Immelt said.
Short-cycle businesses are expected to return to pre-Sept.-11 levels, and long-cycle power businesses should not be affected, GE said.
"Despite the events of September 11 and their damage to an already weak economy, we are confident that GE will grow earnings at double digits in 2001," Immelt said.
Immelt also predicted double-digit earnings growth in fiscal 2002 and that the company would provide specific guidance for the coming fiscal year in December.
Immelt said long-cycle businesses, such as Power Systems and Medical Systems, are expected to post more than 20 percent earnings growth in 2001. GE Capital, the company's financing arm, is also expected to increase earnings more than 20 percent through productivity improvements, completed acquisitions and its diversified portfolio.
Reviewing the impact of the terrorist attacks on New York and Washington, Immelt said the company's Employers Reinsurance Corp. estimate of $600 million in pre-tax insurance losses remains unchanged. GE also said the negative impact of sharply reduced airline flights on aircraft engines and GE Capital Aviation Services divisions is "manageable."
"The terrible events of September 11 have brought out the best in Americans, most of all, the determination to work through an overpowering grief and anger and look past those feelings to the future," Immelt said. "At GE we intend to live up to that determination, and focus on building our businesses and accelerating our growth. We have the employees and the resources to set the pace, and we will achieve that mission."
In addition to its own concerns about the prospects of the U.S. economy and corporate America in light of last week's attacks, Wall Street is also carefully watching Immelt, who replaced the immensely popular CEO Jack Welch.
Welch is credited with making GE one of the most successful companies in America during the last 20 years. Immelt, a 19-year GE veteran, was one of two candidates to succeed Welch. 
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General Electric
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