Defensive Posture Helped Boost GE

General Electric Co. Chairman and Chief Executive Jeff Immelt told investors Tuesday that the “worst is over” for the company’s finance unit, and he forecast that GE revenue next year will roughly equal this year’s.

Speaking from the stage of “Saturday Night Live” in New York’s Rockefeller Center, Mr. Immelt said GE’s outlook improved after the company played “defense” for much of the past year. “I think you can think about the company being back on offense, doing what we do best,” he said. He also said the global economic environment is improving, though he expects the recovery to be gradual.

GE projects 2010 revenue of about $155 billion, flat with this year, and a profit margin of about 16%, also unchanged. GE doesn’t offer a formal earnings estimate, but Mr. Immelt said he expects sales and profit in GE’s industrial units to be roughly flat next year compared with this year. GE said last week it expects profit at its finance unit, GE Capital, to be flat in 2010.

Mr. Immelt expects sales of industrial equipment such as locomotives and aircraft engines to fall in 2010, but he hopes to compensate with increased revenue from servicing previously sold equipment. Services will account for as much as 70% of the industrial units’ profit, he said.

The company said it will have $7 billion or $8 billion of cash on hand at the end of 2009 and $23 billion to $26 billion at the end of 2010. Mr. Immelt said GE plans to use some of the cash for industrial acquisitions.

He also said the company will realize $11 billion this year in orders and revenue from economic-stimulus programs in the U.S., China, Europe, Japan and elsewhere. He said 40% of that revenue is coming from outside the U.S., on projects such as water, health care and clean energy.

GE wants to rebuild trust with investors after the credit crisis and recession, when GE was forced to cut its dividend and lost its triple-A credit rating, Mr. Immelt said. “We’ve gone through a lot. We’ve put you through a lot,” he added.

He also acknowledged that GE Capital had expanded too aggressively in areas such as real estate and “got into businesses that are not part of the GE core.” GE has injected $15 billion into GE Capital in the past 18 months and plans another $2 billion infusion in 2011 to shore up the troubled unit.

Steven Winoker, an analyst at Bernstein Research in New York, said GE’s projection was “more reasonable” than in prior years.

The company’s stock fell 20 cents Tuesday in New York Stock Exchange composite trading, to $15.75 a share. It’s down 2.8% for the year, compared with a 19% gain in the Dow Jones Industrial Average.

Mr. Immelt said GE’s NBC Universal entertainment unit expects to lose “a couple hundred million bucks” on broadcasts of the Winter Olympics from Vancouver in February.

He added that GE’s plans to sell a majority stake in NBC Universal and shrink its finance unit will make it easier to manage—and to understand—the company. “Going forward, we really just have a simpler task,” he said. “It is to continue to invest and grow in infrastructure and technology businesses and to create value in our capital-finance businesses. It’s a much easier hand to play.”

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