GE Capital to continue downsizing
GE Capital plans to continue downsizing parts of the business even as overall loan volume increased 30 percent in the fourth quarter.
In the fourth quarter, Fairfield-based General Electric Co. reported its first year-over-year increase in revenue in two years, earning $4.5 billion on sales of $41.4 billion. Both GE and Norwalk-based GE Capital maintain among the largest work forces in Fairfield County.
As of Jan. 1, GE is no longer offering new employees the option of enrolling in its traditional, defined-benefit pension plan. All new workers will have the option of signing up for the company”™s defined contribution retirement plans.
In January, federal regulators cleared GE”™s sale of a majority stake in NBC Universal to Comcast Corp. GE retains a 49 percent share of NBC Universal, which is based in New York and which will be led by Comcast executive Steve Burke. Philadelphia-based Comcast is folding in several of its own units including Versus, a sports cable channel with a production studio in Stamford.
In its final, full quarter under GE control, NBC Universal led all divisions at the conglomerate by raising revenue 12 percent to nearly $4.8 billion, and boosting profits 38 percent to $830 million. That occurred despite no breakout show from the fall schedule.
In a conference call with investment analysts, GE CEO Jeff Immelt cited general momentum in GE businesses as well as improved performance by GE Capital for boosting the corporation”™s overall results.
In the fourth quarter, GE Capital held profits flat at nearly $1.1 billion, even as revenue fell 4 percent to $11.9 billion.
“There”™s just more liquidity out there ”“ that”™s going to help commercial real estate,” Immelt said. “Losses are lower, origination is strengthening, so there”™s just lots of clues along the way.
“We are running the place with intensity. But we do see things that continue to be encouraging as we look at the broad economy.”
Asked whether he thought the turn in the real estate markets is sustainable, GE Chief Financial Officer Keith Sherin said that loan impairment losses seem to have already peaked, but that GE Capital will continue cutting headcount as it works through some of its “red asset businesses,” in his words.
“Now we got to see what kind of pace of recovery we will have,” Sherin said. “We obviously have some good indicators early on in delinquencies and the fact that credit losses on the debt books improved ”¦ We got to see what the pace of that is in terms of occupancy, rental growth and overall (gross domestic product). But I think it seems to us like the losses have certainly peaked in ”™10, and we expect a strong improvement in real estate in ”™11 and ”™12.
“It”™s going from a big loss to a lower loss,” Sherin said, speaking of the Norwalk-based GE Real Estate unit of GE Capital.
In mid-January, President Obama named Immelt to chair his panel of economic advisers, replacing onetime Fed Reserve Chairman Paul Volcker.
“All you guys know my commitment to GE and my leadership at GE, and that doesn”™t change,” Immelt said. “But at the same time, I”™m honored to be able to work on something I think has importance in ”¦ competitiveness in jobs and a focus on exports, global tax policy, regulatory, manufacturing jobs, energy, things like that.”