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General Electric Affirms Outlook

June 21, 2003|From Bloomberg News

General Electric Co., the world's largest company by market value, maintained its 2003 profit forecast Friday of $1.55 to $1.70 a share, citing strength in its consumer finance, jet engine and transportation businesses.

Five analysts Thursday lowered their forecasts because the company's May orders for plastics and appliances were less than expected. General Electric will tighten the range in the third quarter, Chief Financial Officer Keith Sherin said at an analysts' meeting in New York.

"The fact that they haven't narrowed the range is indicative of how much uncertainty there is in the economy and in their end markets," said Jeff Graff, an analyst at Victory Capital Management Inc., which holds 28 million General Electric shares among $70 billion in assets. "The good news is that they didn't lower the range."

Some analysts had expected the Fairfield, Conn.-based company to narrow its forecast to the low end of the range after the order report suggested manufacturers have yet to recover from a slowdown.

General Electric has targeted annual earnings growth of as much as 13%, helped by revenue from servicing products, investment in new business and acquisitions.

"They've got 11 separate business units," Arthur Hogan, chief market analyst at Jefferies & Co. in Boston told Bloomberg in a radio interview. "A slippage in one can be made up in another."

General Electric shares rose 15 cents to $30.01 on the New York Stock Exchange. They have climbed 23% this year.

General Electric, a component of the Dow Jones industrial average, still expects to earn 37 to 39 cents in the second quarter, Sherin said. He credited in part the company's NBC network, which he said "is just terrific across the board."

NBC, the top-rated U.S. television network among young adults, last month said it booked a record $3 billion in advertising sales for the next TV season, up 11% from last year and higher than forecasts.

Better-than-expected results from NBC and power businesses should help General Electric make up for any shortfall from plastics, Merrill Lynch analyst John Inch said Thursday in a report. NBC contributed a little more than 5.4% of the company's 2002 revenue.

Orders for plastics such as computer casings and compact discs fell as much as 20% in May, while appliance orders fell as much as 5%, General Electric said this week.

The company is expected to report profit of 38 cents a share this quarter and $1.60 in 2003, according to a Thomson First Call survey.

Chief Executive Jeffrey Immelt last month maintained the 2003 forecast even as the economy failed to improve. He said then that he may narrow the range around the start of the third quarter. The company will report second-quarter results July 11.

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