Investors fret over GE Capital, as GE shares slide

Investors fret over GE Capital, as GE shares slide

BOSTON/NEW YORK (Reuters) - General Electric Co investors have one big worry these days: Is its hefty GE Capital finance arm -- the main reason for a 2008 profit drop -- poised to handle the worst economic downturn in decades?
Analysts and investors have pounded the U.S. conglomerate's shares to their lowest level since the early 1990s this week as they wrestle with the question of whether the finance operation -- which a few years ago represented half of GE's profits -- is adequately prepared for a surge in defaults by increasingly unemployed consumers and tottering mid-sized businesses.
The fear is that GE's planning for the unit, which anticipates a 42 percent fall in profit and rising defaults, may not be sufficiently bearish.
"It's not as if the world has confidence in any security, but this team has managed to just shatter investor confidence by continually being more upbeat than they deserve to be," said Charles Ortel, managing director of securities research firm Newport Value Partners in New York, which does not hold a position in GE shares.
Investors fear GE Capital's reserves for losses are too low in comparison with the top U.S. banks. Read more...

http://www.reuters.com/article/ousiv/idUSTRE5235NJ20090304