Jan. 23 (Bloomberg) -- General Electric Co. fell the most in more than two months as Chief Executive Officer Jeffrey Immelt failed to allay some investor concerns the company’s earnings power won’t be enough to shield the dividend and AAA credit rating.

GE dropped $1.45, or 11 percent, to $12.03 at 4:15 p.m. in New York Stock Exchange composite trading, the biggest percentage loss since Nov. 20. More than 325 million shares changed hands, making it the day’s most traded company in U.S. markets.

Immelt said he remains committed to the $1.24 annual dividend and keeping the company’s triple-A credit rating, the highest available. He repeated a projection for about $5 billion in profit at the GE Capital finance arm and as much as 5 percent earnings growth at the largest industrial and media units. Fourth-quarter results fell below some analyst forecasts in the technology infrastructure segment, including healthcare.

“We’re not buying shares of GE,” Peter Klein, senior portfolio manager at Fifth Third Asset Management in Cleveland, said in a Bloomberg Television interview. “I would have to have a lot of confidence that they’ve got a realistic assessment of their finance situation as well as a more realistic assessment of the industrial side of the equation.” Fifth Third manages $18.5 billion including 4.8 million GE shares.

Fourth-quarter profit from continuing operations declined to $3.87 billion, or 36 cents a share, as the global credit crisis eroded income at the finance segment. Results at GE Capital were helped by $900 million in tax benefits, which tempered losses and impairments of $2.6 billion, the company said.

Per-share profit before the payment of preferred dividends related to a stake owned by Warren Buffett’s Berkshire Hathaway Inc. was 37 cents, meeting analysts’ estimates. GE announced last month it would cease making per-share profit forecasts this year.

Got Cash

GE closed at the lowest price since 1996 as investors questioned Immelt’s ability to protect both the AAA credit rating and the dividend amid a deepening recession. Immelt, 52, is shrinking the finance unit to 30 percent of profit from more than half in 2007. The company tripled cash on the balance sheet to $48 billion last year.

“I wish my words could end the speculation,” Immelt said in an interview today on the company-owned CNBC television network. “The facts of what we’ve done here, I think, should let investors know that we’ve got the cash, and we’ve got the operating model that’s going to secure the dividend in this environment.”

Immelt in December said GE may generate as much as $16 billion in cash after capital expenses, mainly from the sale of industrial goods like jet engines and power turbines. That would be more than enough to pay the $13.4 billion dividend. Some analysts said they remain skeptical.

In Jeopardy

“The $5 billion of earnings contribution from GE Capital is going to be difficult in the best of circumstances,” said Stephen Hoedt, an analyst at Cleveland-based National City Corp., which owns more than 13 million GE shares. “They are counting on GE Capital to pick up in the second half of 2009 as long-cycle infrastructure businesses slow. If either of those businesses does worse than they plan, then the AAA and dividend is in jeopardy.”

The company’s $51 billion infrastructure backlog includes $26 billion in equipment scheduled to ship this year, Chief Financial Officer Keith Sherin said in an interview. Service contracts make up the majority of the parent company’s $172 billion backlog, and there have been few large cancellations, he said. Orders in the infrastructure divisions slipped 6 percent last quarter.

GE is the world’s biggest maker of power-plant turbines, jet engines, locomotives and medical imaging equipment. The company also owns NBC Universal and finance units include real estate, the world’s biggest aircraft lessor, middle-market and bankruptcy lending as well as private-label credit cards. During the quarter, GE won a $3 billion order for power-plant turbines and services from Iraq, its largest ever.

Revenue Shortfall

“GE is really going to have to outperform exceptionally to achieve their industrial goal in 2009,” said Joel Levington, director of corporate credit for Hyperion Brookfield Asset Management in New York, citing the global slowdown.

In the fourth quarter, revenue fell 4.8 percent to $46.2 billion from $48.5 billion a year earlier, the company said today in a statement. Year-earlier profit was $6.83 billion, or 68 cents a share. The company boosted reserves and increased loss projections at some GE Capital units.

GE added to reserves at its finance division, bringing coverage to $7.3 billion in 2008 and anticipating $7.2 billion in 2009, more than projections the company made Dec. 2. GE Real Estate will post a loss of $500 million this year as it absorbs $4 billion more in pretax losses, the company said. That will drag GE Capital’s profit down to $5 billion from $8.6 billion in 2008.

Buffett’s Stake

The first quarter will “look more like the fourth quarter” at GE Capital, Sherin said. GE increased its estimate for losses it will have to absorb this year to $10 billion, $1 billion more than its Dec. 2 forecast.

“We have a lot of work to do to demonstrate we can make the $5 billion in 2009,” Sherin said. “We have a very challenging year. We have to work our way through this current period.”

General Electric used $5.5 billion of its $15 billion stock sale in October to bolster GE Capital’s balance sheet, reducing the leverage ratio to 7-to-1. The company as a whole is targeting $5 billion in cost reductions in 2009 and is “aggressively” pursuing that goal, Sherin said.

GE raised $12 billion in the open market and $3 billion from Buffett’s Berkshire Hathaway via a preferred stake. Immelt said today he “can’t see a scenario” where the company would turn to the equity markets to raise cash again.

‘Not Straining’

On Dec. 18, Standard & Poor’s cut GE’s outlook to “negative” from “stable” and said the company had a one-in- three chance of losing its top rating over the next two years as earnings deteriorate.

“We remain committed to the AAA,” Immelt said on a conference call today with analysts and investors. “The dividend is a good return to investors in this environment of uncertainty, but we’re not straining to pay it.”

The payout is being held at $1.24 a share for 2009, the first year in more than three decades without an increase. It currently yields about 9.6 percent.

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net.

Last Updated: January 23, 2009 16:44 EST