GE Hikes Cost-Cutting Goal to $3 Billion

ERIE, Pennsylvania (Reuters) – General Electric Co (GE.N: Quote, Profile, Research)chief Jeffrey Immelt said on Wednesday U.S. capital markets haveimproved since the end of the first quarter but the overall U.S.economic picture is unchanged, and the company has raised its 2008cost-cutting goal by $1 billion.

"The capital markets are a little better" than they were at the endof March, when turmoil prompted by the near-collapse of Bear StearnsCos Inc (BSC.N: Quote, Profile, Research) made it difficult for GE to complete deals, Immelt said at the company’s annual meeting.

GE’s inability to close some financial asset sales at the end of thefirst quarter contributed to its unexpected drop in profit, whichtriggered the sharpest sell-off in its shares in two decades. Some ofthese deals have now been completed, Immelt said.

"The U.S. economy hasn’t gotten any worse or any better and theglobal economy still seems to be pretty good," Immelt, GE chairman andchief executive, told reporters ahead of the conglomerate’s annualmeeting in Erie, Pennsylvania.

GE, the second-biggest U.S. company by market value, has raised its2008 cost-cutting goal to $3 billion from $2 billion, Immelt said. Lastyear the company cut costs by $2 billion.

GE slashed its full-year profit forecast to a range of $2.20 to$2.30 per share — meaning profit would be flat to up 5 percent — inthe wake of the grim first quarter. It had previously forecast a risein profit of at least 10 percent.

"We are in the toughest economy since 2001 and the worst housingcrisis since the depression," Immelt told shareholders, standing infront of a bright yellow GE-built hybrid railroad locomotive.

Asked about the slump in GE’s stock and questions raised about hiscredibility in the wake of the company’s unexpected drop in profit thismonth, Immelt said, "I think my track record over a long period of timewith this company has been good. I expect it to be good in the future…. You don’t do a job like this if you can’t take a punch."

GE shares were up 33 cents, or 1 percent, at $32.66 in early tradingon the New York Stock Exchange. They are down 12.5 percent so far thisyear, a steeper drop than the 4 percent slide of the Dow Jonesindustrial average .DJI.

Immelt told shareholders he had started doing more frequent reviewsof GE’s segments to "insure that there are no time gaps between how wedescribe the company and what we deliver."

Immelt spoke in Erie, Pennsylvania, a city of about 102,000 peoplein the state’s far northwestern corner, where GE manufactures railroadlocomotives, engines for steamships and gear boxes used inelectricity-producing wind turbines. The Fairfield, Connecticut-basedcompany holds its annual shareholders meeting in a different locationeach year, selecting cities where major units are based.

(Editing by Mark Porter and John Wallace)