GE shares fall on fears of lost nuclear sales, liability

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Wednesday March 16, 2011 12:30:13 PM GMT

NEW YORK, March 15 (Reuters) - Shares of General Electric Co extended this week's declines on Tuesday on concerns that Japan's nuclear crisis will cost the company tens of billions of dollars in lost sales as well as potential legal costs or even liability over its nuclear technology.

GE shares were trading at $19.02 before Tuesday's stock market open, down 4.5 percent from their Monday close of $19.92.

"It's their design, their reactor," said Jack De Gan, chief investment officer at Harbor Advisory Corp. in Portsmouth, New Hampshire, which owns GE shares.

De Gan added that although GE was unlikely to be held legally liable and any legal action would take decades, "If there is liability it is absolutely enormous."

Japan faced a potential catastrophe on Tuesday after a quake-crippled nuclear power plant exploded and sent low levels of radiation floating towards Tokyo.

Two of the reactors exploded on Tuesday at the Fukushima Daiichi plant after days of frantic efforts to cool them. Kyodo news agency said the nuclear fuel pool at the No. 4 reactor may be boiling.

The bigger worry for GE investors is what the situation in Japan does to future GE sales of nuclear technology, De Gan said.

"The biggest number (of potential future sales) go out to command economies like China," he said. "It's the democracies where this is going to gum up the pipeline for nuclear."

If the reactor melts down and releases large amounts of radiation, GE stands to lose tens of billions of dollars in future sales in markets where nuclear opponents can prevent new work. If the current situation is contained, GE is more likely looking at delays.

(Reporting by Nick Zieminski, editing by Dave Zimmerman)

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