General Electric Co. (GE) may still have to trim forecasts for its industrial units this year, according to one investor, limiting their positive impact as the company restructures its troubled financial business.

The company, which suffered a ratings cut Thursday, is counting on units producing big-ticket items such as aircraft engines, energy generation equipment and medical devices to produce the bulk of its forecast $16 billion in cash flow this year.

But the broad economic downturn, which appears to have picked up some steam early in 2009, has the potential to hinder returns.

"I would expect some of that [order] backlog to be subject to push-outs and cancellations," said Eric Boyce, a portfolio manager at Hester Capital Management in Austin, which owns about 600,000 GE shares.

"There's no question the book of business is going to contract for everybody in the capital goods space" over the coming weeks.

Jeff Immelt, GE's chief executive, acknowledged in a recent letter to investors accompanying its annual report that the industrial operations "face some headwinds" amid the downturn.

However, he stressed that GE's $172 billion backlog in infrastructure products and services, as well as potential drivers like stimulus spending by governments were a positive for the company.

The conglomerate has consistently reiterated its December forecast for industrial earnings to be flat to up 5% in 2009.

However, rivals in some of the business segments - including United Technologies Corp. (UTX) and Emerson Electric Co. (EMR) - have reported that conditions have continued to deteriorate in recent weeks.

GE business segments that appear particularly vulnerable include its transportation products, such as locomotives and aircraft engines.

In his recent letter, Immelt acknowledged as much, noting that he anticipates some order cancellations for aircraft engines and for health care-related diagnostic imaging equipment. He said cost cuts and revenue from maintenance and services should offset the trends.

The conglomerate's energy-related products could be among its most insulated, however, despite declining oil prices. GE has said it anticipates "earnings and margin growth" for the segment this year, based partly on long-term energy demand trends.

The short-term outlook for GE's industrial businesses hinges on the depth and duration of the ongoing economic downturn, a dubious prospect at a time when the slump shows few signs of turning.

"I think you're seeing [economic] weakness here in March that was not anticipated in January," Boyce said. However, he said the industrial businesses are worth more than the current stock price even on a "trough-earnings" basis. The question that only time can answer is whether the trough has been reached.

GE shares were up 11.8% recently, or $1.00, at $9.49.

-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com