GE sees "measured" action on dividend

CHICAGO (Reuters) - General Electric Co (GE.N) remains confident in its profit targets for its infrastructure divisions and expects to take "measured steps" as it evaluates its dividend, a top executive said on Tuesday.

The U.S. conglomerate also may have additional layoffs at some of its businesses depending on outlooks for the second half, said John Rice, a vice chairman of the U.S. conglomerate who serves as chief executive of its GE Technology Infrastructure division.

The world's largest maker of jet engines and electricity-producing turbines said earlier this month it was evaluating whether to continue its $1.24 per share annual dividend beyond the second quarter.

"The board and the management team want to be sure that we're in a position to take any action necessary to keep our company safe and viable for the next 130 years," Rice told the Reuters Manufacturing and Transportation Summit in a telephone interview. "The board is going to take measured steps to think about all of this. Everything is going on in the context of the dividend."

Wall Street has been intensely focused on GE's dividend, as well as the risk of GE losing its top-tier credit rating, with some arguing the company might reduce the dividend drastically.

"A lot of the uncertainty with GE is related to their dividend," said Perry Adams, vice president and senior portfolio manager at Huntington Private Financial Group in Traverse City, Michigan, which holds GE shares. A moderate move would be a boost to confidence since "that would suggest they are fairly confident that their reserves for any losses (at GE Capital) are fairly adequate."

The Fairfield, Connecticut-based company said in December it expected profit at its two infrastructure units to be flat to up 5 percent this year.

"We still see ourselves in that range," Rice said.

"In each business, they are going to look at volume, they are going to make assumptions about second-half revenue and if second-half revenue isn't where we thought it would be in December, then we could have cost reductions including job reductions consistent with that," he said.

BIRD IN HAND

The company has not seen major order cancellations, though some customers have sought to push back deliveries, Rice said.

"What we are seeing are people looking at the timing of shipments in the backlog," Rice said. "The question is whether the unit will ship in the third quarter or the fourth quarter or the first quarter or the second quarter of 2010."

One thing the company is not doing is relying much on its planning for orders not yet on the books.

"We're not counting too much on that," he said. "If we don't have it in our hand we're going to assume we may not get it."

GE, perceived as a barometer of the economy due to its range of businesses and global reach, has disclosed plans to lay off 1,000 workers at its aviation business and to furlough or lay off more than 1,500 at its locomotive unit, as well as an unspecified number of job cuts at its GE Capital finance unit.

GE has declined to tally the jobs that would be cut company-wide. Rice said that job cuts would be decided by individual business units.

The conglomerate's competitors include a lineup of some of the world's largest companies, including Swiss engineering group ABB (ABBN.VX), French industrial group Alstom SA (ALSO.PA) and German conglomerate Siemens AG (SIEGn.DE).

GE has been under intense pressure over the past year as profits have fallen at its hefty finance unit. Its shares have already fallen by about 44 percent so far this year, a far sharper drop than the 15 percent fall of the Standard & Poor's 500 index .SPX.

Rice described the fall in the company's stock as reflecting an overly bearish view of GE Capital. Profit at that unit last year fell 29 percent to $8.63 billion.

"We're in a world where people are painting everybody in financial services with the same brush," Rice said. "The markets may value our financial services earnings at zero, but we believe they're worth a lot more than zero."

GE shares closed up 23 cents or 2.6 percent at $9.08 on the New York Stock Exchange on Tuesday.

(For summit blog: summitnotebook.reuters.com/)

(Reporting by Scott Malone, editing by Leslie Gevirtz and Matthew Lewis)