Shares of the second-largest U.S. company by market capitalization fell almost 10 percent, dragging down global markets.
Due to the size and variety of its operations, GE is regarded as a bellwether of the U.S. economy.
"It's confirmation that we're in a recession," said Jerome Heppelmann, portfolio manager at Liberty Ridge Capital in Berwyn, Pennsylvania.
The company also lowered its earnings forecast for the year, reflecting a slower economy and challenging capital markets.
"These results confirm that the slowdown is widespread and beginning to impact capex (capital expenditures) and longer-cycle businesses," said Stephen Surpless, senior analyst at Cantor Fitzgerald in London.
"While the credit crisis might be nearer to the end than the beginning, according to some, the impact on the real economy is taking place and is unlikely to abate in 2008," he added.