Analyst: GE rating or dividend may be vulnerable

BOSTON, Jan 5 - Shares of General Electric Co fell 2 percent on Monday after an analyst said the U.S. conglomerate's triple-A credit rating or dividend "looks likely to be reduced" this year.

GE shares lost about half their value last year as the credit crunch took a heavy toll on its hefty finance business, and last month Standard & Poor's lowered its ratings outlook on the company to "negative," meaning that it had a one-in-three chance of losing its top-tier rating over the next two years.

"We believe GE is likely to face a serious decision: Whether to try to sustain its dividend or allow its AAA credit rating to be reduced," wrote Sterne Agee analyst Nick Heymann, in a note to clients. However, he said he considered any ratings change unlikely until the company has reported first-quarter or even second-quarter financial results. Those reports are expected in April and July.

GE shares fell 35 cents to $16.72 on the New York Stock Exchange, after having dipped as low as $16.51.

GE officials have repeatedly said that keeping the "AAA" rating, which allows GE to borrow money more cheaply, is a top priority. They have also confirmed plans to pay an annual dividend of $1.24 per share this year.

A GE spokesman could not be reached for immediate comment.