General Electric may succeed in keeping its AAA credit rating throughout the credit crisis but failures to meet expectations this year could cost the conglomerate something it had held almost as dear – a reputation for outperformance during tough times.

Harnessing the power of a diverse set of profitable businesses and pristine credit, so the thesis went, GE would reward investors with predictable results and bold investments.

But, barring a recovery in the year’s final months, GE’s shares will lag behind peers far closer to the crisis’ epicentre, including JPMorgan Chase. In fact, GE’s year-to-date decline of 30 per cent only narrowly edges out those of Citigroup and Goldman Sachs, two financial institutions that have raised billions of dollars amid concerns for the strength of their balance sheets.

For the second time this year, the Fairfield, Connecticut-based company told investors it would miss its own quarterly and full-year profit forecasts.

GE still expects to earn $20bn this year. It still possesses many industry-leading businesses and the AAA debt rating, and has not trimmed its stock dividend. Even GE Capital, the financial unit blamed for both the company’s first and third quarter shortfalls, will generate profits of more than $9bn.

“We’ve dramatically outperformed our peer financial institutions,” Keith Sherin, GE’s chief financial officer, told the Financial Times. “But it’s not good enough. People want us to have no issues, and that’s not realistic in the market environment.”

Mr Sherin concedes that GE lost some credibility with investors back in April, when the company was forced to lower its 2008 earnings guidance only weeks after Jeff Immelt, chief executive, said the forecast was “in the bag.”

He said the credit crunch, coupled with slowing economic growth, has robbed GE of the momentum needed to repair quickly its reputation with shareholders.

Listening to Mr Immelt during Thursday’s conference call with analysts, it is clear that stockholder relations would take a back seat until the deepening financial crisis recedes.

In his remarks, Mr Immelt said GE was taking “pro­active steps” to “keep the company safe”. He noted that the dividend was “secure” and that the company would reduce its dependence on GE Capital.

GE does not plan to sell long-term debt for the rest of the year, is scaling back on short-term borrowing programmes and suspended its stock buy-back plans. By the end of 2009, its financial-services businesses would comprise no more than 40 per cent of total profit. It will pull back from commercial real estate investments, a dependable source of income until this year, when the credit markets’ upheaval stymied GE’s efforts to sell some properties.

The measures are intended to persuade credit ratings firms that GE is, as Mr Sherin put it, “running the company as a AAA company should”, even if those agencies have never specified exactly what that means.

“The company is financially strong,” Mr Immelt said.

That may not be good enough for some stockholders. As long as the credit ratings firms and debt investors think so, it may not matter.

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