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To: Johnny Canuck who wrote (45181)	12/3/2008 1:45:13 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 71912

GE Capital Loses Leverage Maurna Desmond, 12.02.08, 07:40 PM EST Investors cheer restructuring of financial unit. * General Electric Co. Wed Dec 03 2008 01:42 EST $17.61 $+2.11 +13.61% Chart General Electric Co.Chart General Electric Co.Chart General Electric Co. o 1 day o 3 mo o 1 year o Advanced Tearsheet \| Chart \| News General Electric brightened the market on Tuesday as investors cheered the company's decision to restructure its financial business and promised to maintain its dividend next year. General Electric (nyse: GE - news - people ) executives laid out a plan to retool GE's ailing financial arm during a conference call on Tuesday. They will implement a credit crunch-adapted funding plan, deleveraging to a capital ratio of 6-to-1 from a previous 8-to-1, and reducing GE’s commercial paper balance. Chief Financial Officer Keith Sherin said the new arrangement "anticipates a challenging loss environment." Article Controls imageemail imageprint imagereprint imagenewsletter imagecomments imageshare imagedel.icio.us imageDigg It! imageyahoo imageFacebook imagerss Yahoo! Buzz The Fairfield, Conn.-based company closed Tuesday's trading session up by 13.6%, or $2.11, at $17.6. The boost has been a break from doubt; exiting shareholders have knocked 58.6% off the company's value in the last 12 months, despite GE's efforts to assuage investor fears over its exposure to toxic assets and funding abilities. (See "General Electric's Drag.") A recent $12.0 billion bond issuance and a high-yield $3.0 billion cash infusion from Warren Buffett's Berkshire Hathaway, (nyse: BRK - news - people ), along with participation in several government lending programs, has underscored the firm's seemingly desperate need for capital. GE now expects fourth-quarter earnings of 50 cents to 52 cents a share, excluding an estimated $1.0 billion-1.4 billion after-tax restructuring charge. The firm, which said it will cut jobs in both the finance unit and its industrials division, plans to maintain its $1.24 per share dividend in 2009. GE Capital is now expected to earn $8.0 billion in 2008 and $5.0 billion in 2009--it's expected to return to double-digit earnings growth in 2010. GE foresees earning about $18.0 billion overall in 2008, including potential charges. Concern over GE Capital’s health has been growing, especially after its earnings fell by a third in the third quarter, helping to drag down the company's overall quarterly results by 23.2%. (See "Bad News Is Good News For GE.") This loss was a dramatic reversal of fortune for a one-time company powerhouse that averaged an earnings increase of 15.0% over the last two decades. Gangbusters growth allowed it to send a fat dividend to its parent, recently chipping in roughly 40.0% of GE’s second-quarter earnings. In September, it was announced that the 40.0% dividend that GE Capital had been paying to GE would be slashed to 10.0% and the subsidiary’s exposure to commercial paper would be reduced to 10.0%-15.0% of total debt.