General Electric Co Chief Executive Jeff Immelt told shareholders on Wednesday that it is hard to tell how long the current global recession will linger.
It's difficult to predict how bad this will be and how long this will last, Immelt said at the company's shareholder meeting in Orlando, Florida, where the largest U.S. conglomerate has a large entertainment business. The global economy and capitalism itself have been fundamentally reset.
The Fairfield, Connecticut-based company has seen its shares pounded over the past year as its GE Money finance arm -- which has operations ranging from U.S. store credit cards to financing jet engine purchases -- has dragged heavily on its results.
The concerns about GE Capital have certainly been weighing on our stock. We're up off the lows of March, which we feel good about, Chief Financial Officer Keith Sherin said. At the end of the day the stock performance in 2008 and 2009 is disappointing to all of us, but it's not like it's an isolated event.
GE shares are down about 65 percent over the past year, a deeper drop than the approximate 37 percent fall of the Dow Jones industrial average .DJI . GE is the sole original member to remain in that widely watched group.
The world's largest maker of jet engines and electricity-producing turbines last week reported a 36 percent drop in profit, heavily weighed by finance and by its NBC Universal media business.
So far this year, GE has been stripped of its top-tier AAA credit ratings by Standard & Poor's and Moody's, and the board has cut its shareholder dividend 68 percent to conserve cash.
A group of a few dozen GE retiree stockholders picketed outside the meeting, saying the decision to cut the dividend had hurt their finances.
By Mr. Immelt cutting the dividend by two-thirds, it hits the retirees who can no longer afford to live the lifestyle they are used to, said Jack Richards, 68, who resides in Fort Lauderdale, Florida. I can't afford to do the things I used to do, I've cut back on travel, I can't go back to visit my son in Boston.
Sherin said the cut was a tough call but necessary to protect the company.
The decision to cut the dividend between Jeff and I was the toughest decision we've ever wrested with, Sherin said. At the end of the day the decision was to protect the franchise. (Reporting by Scott Malone, editing by Gerald E. McCormick and Maureen Bavdek)