Shares of General Electric Co. fell 8 percent, extending their Friday declines on fears that its financial business would be hit by the collapse of Lehman Brothers and shakiness at other banks.
Lehman Brothers Holdings Inc. has filed for Chapter 11 bankruptcy protection, while Merrill Lynch & Co. agreed to sell itself to Bank of America Corp. in an all-stock transaction worth about $50 billion to avoid more losses.
The broader worries added to fears that sparked a decline in GE’s stock Friday, which an analyst attributed to the conglomerate’s inability to sell its private-label credit card business.
Analyst Nicholas Heymann of Sterne Agee in New York said Friday that investors believed GE would sell its credit card business this summer.
“People are looking around, asking, ‘Is GE going to get this done?'” he said.
GE decided to post assurances on its Web site Sunday as officials of the U.S. Treasury, Federal Reserve, CEOs and others were grappling with the massive troubles sweeping financial service firms.
“In response to questions we received on Friday and because of the extraordinary market conditions, we wanted to provide our investors with additional information on GE’s financial services businesses,” GE said.
GE’s financial services business said on its Web site that, as stated in GE’s second-quarter earnings call, the commercial real estate business will earn $1.5 billion to $1.7 billion in 2008.
Spokesman Russell Wilkerson said GE officials fielded calls Friday from investors concerned about the dropping share price.
“There were a lot of questions out there, so we wanted to provide additional information,” Wilkerson said.
GE Financial Services said Sunday that in the first quarter, it purchased Merrill Lynch’s $900 million construction portfolio at a steep discount.
GE also said Sunday it has raised $70 billion in long-term debt, or nearly 90 percent of its plan to raise $80 billion for the year. And the conglomerate said its third-quarter funding plan is complete.
Shares of GE closed at $24.60, down $2.15, or 8 percent. Earlier in the session, the stock set a 52-week low of $23.91.
