NEW YORK – General Electric Co. on Friday said it remains on track to deliver double-digit earnings growth this year, despite the soft economy and its insurance unit's losses from last week's attacks on the World Trade Center and Pentagon.
In his first meeting with securities analysts since succeeding the legendary Jack Welch as GE's chief executive earlier this month -- and one of the first major U.S. corporate gatherings since hijacked airliners killed thousands in destroying the Trade Center's twin towers and damaging the Pentagon on Sept. 11 -- Jeff Immelt was quick to assure the financial community that the company would continue to deliver on its long track record of steady profit growth.
Immelt said GE's shorter-cycle businesses are seeing order rates near their pre-attack levels. ``They were managing through a slowdown before Sept. 11 and will continue to do so,'' he said.
The reassurance from GE helped power a recovery in U.S. stocks. The Dow Jones industrial average, which had succumbed to a fifth day of heavy selling, started bouncing back from a 3 percent loss after Immelt's comments hit the market. The Dow was off about 153 points, or 1.83 percent to 8223, at about 11 a.m. EDT, after spiking as high as 8438.
GE shares, which had been down by as much as 5.5 percent in early trading, were up 65 cents, or 2.14 percent, at $31.02.
Immelt credited Fairfield, Connecticut-based GE's diversity of operations -- which span manufacturing, broadcasting, medical systems, finance and aerospace -- for giving it the wherewithal to grow during trying times.
In particular, he said its Medical Systems, Power Systems and GE Capital businesses were positioned for earnings growth of more than 20 percent next year. Those should help offset advertising revenue declines at its NBC television network, insurance losses at its Employers Reinsurance Corp. arm, and the effects of the pull-back by air carriers after the attacks.
``GE is built to outperform,'' Immelt said in a statement. ''Our long-cycle Power Systems and Medical Systems businesses, as well as our diversified GE Capital business, continue their strong growth.''
Immelt said that in 2001 the company is targeting earnings per share growth of 11 percent, to $1.41 per share from $1.27 in 2000. That is after absorbing a loss of 4 cents per share for attack-related insurance losses announced last week.
Before Sept. 11, the company had targeted earnings per share of $1.45 or more and was on track to achieve it, the company said.
Analysts have been looking for GE's 2001 earnings to range from $1.40 to $1.47 per share, with a mean forecast of $1.41, according to research firm Thomson Financial/First Call. For 2002, Wall Street is looking for its profit to rise to between $1.55 and $1.74 per share, with an average view of $1.61.
The company repeated that it expects pre-tax losses from the attacks to cost Employers Reinsurance about $600 million.
For GE, one of the largest makers of jet engines, the effect of airline schedule cutbacks in the aftermath of the attacks, ``is manageable,'' Immelt said.
U.S. airlines have slashed schedules by 20 percent or more since the Sept. 11 attacks. Several have said they need government assistance to stave off bankruptcy as revenue falls drastically and costs rise from new security initiatives.
On Sept. 11, four airliners were hijacked -- two from AMR Corp.'s American Airlines and two from UAL Corp.'s United Airlines. Two of the jets slammed into the Trade Center in New York, destroying the landmark buildings and leaving more than 6,200 people dead or missing. Another of the jets crashed into the Pentagon outside Washington, killing nearly 200, while the fourth jet crashed in Western Pennsylvania, killing all on board.
Immelt took the reins from Welch on Sept. 7. Welch, who led the company for 20 years and has been with GE for over 40 years, named Immelt as his successor in November 2000. Welch was the company's eighth chairman and CEO.