WASHINGTON — General Electric plans to take investors on a “deep dive” into the books of its wobbling finance unit Thursday, part of an offensive to calm worries that bigger troubles loom at GE Capital.
Investors attending a five-hour GE conference in New York will want to know how healthy the lending unit actually is. They’ll look for more information about losses on investments and bad loans. And they’ll be anxious about GE Capital’s cash levels.
Another question in shareholders’ minds: Will GE’s $5 billion earnings forecast for the unit hold up this year given its lending in battered sectors like real estate and credit cards? Fears of lurking losses at GE Capital have dragged down GE shares 72 percent in the past year. The unit’s problems also have played a big role in GE’s recent dividend cut — its first since 1938 — and the loss of its top “AAA” credit rating.
The meeting is GE’s second update in four months on GE Capital, a complex tangle of $660 billion in assets that some analysts say has been hard to understand because GE did not traditionally say much about it. GE has now promised to be more transparent as it tries to restore confidence.
“Investors are looking for GE to pull the curtain back,” said Matt Collins, an analyst with Edward Jones.
Until recently, the finance unit accounted for half of GE’s overall profits, but GE is now shrinking the business as part of a restructuring.
Chief financial officer Keith Sherin said recently the meeting will focus on “hot spots” at GE Capital. They include home mortgages, credit cards and commercial real estate.
