GE Sees Q4 at Low End of Guidance

General Electric (GE 15.50) stated earlier this morning that it expects fourth quarter earnings to range from $0.50 to $0.52 per share, which is actually at the low end of its prior guidance. GE previously stated it expected to earn between $0.50 and $0.65 per share. The lowered outlook remains in-line with expectations, however. The consensus earnings per share estimate is currently pegged at $0.51 per share. GE reaffirmed plans to maintain its current annual dividend of $1.24 per share through 2009. At GE's current share price, the annual dividend translates to a dividend yield of 8.0%, which is roughly 525 basis points more than the 10-year Treasury Note. Still, investors would likely have preferred to know that the current dividend will always be safe, and any revisions would only be to the upside. GE has consistently boosted its dividend in the past and has been on a streak of annual increases following a stock split in 2000. Concerns continue to stem from financial headwinds, given the company's exposure to lending and capital markets. Turmoil in those markets has driven heavy write-downs in the company's capital unit. GE noted today it is evaluating restructuring and other charges to accelerate losses, and expects to incur after-tax charges that range from $1.0 billion to $1.4 billion. The company also stated it is targeting to reduce leverage to 6-to-1, lower its outstanding commercial paper balance to $50 billion, and reduce overall funding needs. GE noted it has established a framework for its capital division to earn approximately $5 billion in 2009. From there, the company believes the business is positioned to sustain solid, 10% earnings growth in the future. During its conference call, General Electric stated it will be making between $3 billion and $5 billion in cost cuts and will be making headcount reductions, though no specifics will be announced today.