Updated with closing prices.
NEW YORK (
) -- GE says that profits at its lending arm, GE Capital, are expected to improve by 2011.
But before that, it still has many hurdles to clear next year, including resolving GE Capital's exposure to bad commercial real estate loans. The lending arm has a large portfolio of bad loans in commercial real estate, including office buildings. The difficult economic climate has rendered large amounts of vacancies at the commercial buildings.
GE Capital's commercial real estate losses in 2010 will rise to $2.9 billion, up from $2.1 billion for 2009, while commercial real estate values could fall another 13%. The company projects flat GE Capital profits of $2 billion to $2.5 billion next year, but says those should rise in 2011 as the company continues to shrink the size of GE Capital at a pace that's ahead of the company's schedule.
Overall losses at GE's financing arm are expected to peak in 2010 at $13.6 billion, though other previously troubled lending areas, like consumer credit cards and mortgages in the U.K., have been tempered.
GE Capital once provided nearly half of GE's overall profits, but the company is trying to rely much less on GE Capital profits amid its large exposure to bad commercial real estate loans.
The conglomerate says it has raised billions of dollars under a government program designed to ease credit to stabilize GE Capital's cash flow. GE adds that the credit markets are improving, making it cheaper and easier to borrow.
This latest update constitutes GE's third such update on GE Capital, as the conglomerate attempts to ease investor fears after losing its top credit rating, slashing its dividend down by 68% and watching its stock fall 90% from its peak earlier this year.
GE, which makes everything from fridges to power-plant turbines, last week announced plans to sell its NBC entertainment unit to Comcast. GE expects the deal will give it $8 billion and help the company end 2010 with between $23 billion to $26 billion. GE will use the money to fund industrial businesses and will likely infuse GE Capital with $2 billion in 2011.
On Wednesday's close,
stock shed 0.4% to $15.70 and
rose 1% to $17.50.
Other media stocks ended in mixed territory.
added 2.4% at $31.40 while
retreated 0.4% to $12.30.
-- Reported by Andrea Tse in New York.
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