General Electric Issues Rosier Earnings Forecast

General Electric Co. boosted its earnings forecast Thursday and moved ahead with a strategy of returning to double-digit profit growth by shedding slow-growth businesses and eyeing more lucrative opportunities.

The Fairfield, Conn.-based industrial, financial and media company said it expected to collect about $2.6 billion related to stock sales in its insurance business, Genworth Financial Inc. GE is selling off less profitable businesses such as insurance and expanding into faster growth areas such as consumer and commercial finance.

GE cited the Genworth deal and strong performance across its businesses as it lifted its first-quarter earnings target to 37 cents to 38 cents a share, up from 36 cents to 37 cents. It also backed its full-year earnings estimate of $1.76 to $1.83 a share.

Wall Street’s average forecasts for GE were 37 cents a share for the quarter and $1.81 a share for the year, based on a survey of analysts by Thomson First Call.

“GE’s end markets continue to show solid growth, and our businesses are performing very well,” Chief Executive Jeff Immelt said.

GE shares rose 23 cents to $35.73 on the New York Stock Exchange, near its 52-week high of $37.75.

GE often produced double-digit profit growth during the 1990s, but earnings have been sluggish the last three years as major businesses such as gas turbines for power plants have slowed.

GE’s profit jumped 18% in the fourth quarter and is expected to grow 12% to 17% this year.

GE said it priced the secondary offering of 80.5 million Genworth Class A common shares at $26.50 each. The company sold 30% of Genworth last year in an initial public offering and is reducing its insurance holdings as it seeks to exit the insurance business.

At the time the offer closes, GE said Genworth would buy back about 19.4 million shares of its Class B common stock from GE for $500 million.

GE said it would receive proceeds of about $2.6 billion from the secondary offering and the share buyback and would own about 52% of Genworth’s common stock.

GE said it planned to use the proceeds to pay off “parent-supported” debt at GE Capital, allowing GE Capital to raise the dividend it pays GE from 10% to 40% of its earnings starting in the second quarter. That increases the company’s cash flow.