Finance & Business World

Investors attending a five-hour GE conference in New York will want to know how healthy the lending unit actually is. They’ll look for more information about losses on investments and bad loans. And they’ll be anxious about GE Capital’s cash levels.

Another question in shareholders’ minds: Will GE’s $5 billion earnings forecast for the unit hold up this year given its lending in battered sectors like real estate and credit cards?

Fears of lurking losses at GE Capital have dragged down GE shares 72 percent in the past year. The unit’s problems also have played a big role in GE’s recent dividend cut — its first since 1938 — and the loss of its top ‘AAA’ credit rating.

"Investors are looking for GE to pull the curtain back," said Matt Collins, an analyst with Edward Jones.

Until recently, the finance unit accounted for half of GE’s profits, but GE is now shrinking the business as part of a restructuring.

Chief Financial Officer Keith Sherin said recently the meeting will focus on "hot spots" at GE Capital, including house mortgages, credit cards and commercial real estate payday loan companies.

GE expects $35 billion worth of losses and impairments over a three-year period at GE Capital, but Sherin said the parent company has enough cash — $16 billion this year — to meet its funding needs.

While Thursday’s meeting could ease anxiety over GE Capital, GE is also taking a risk by opening up its books, analysts say.

"It is an opportunity for the psychology to turn more positive," said Peter Sorrentino, senior portfolio manager of Huntington Asset Advisors, which owns 6.4 million GE shares. "But all it takes is one stumble or one missed target and they will give up all the gains they had in the last couple of days."

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