Perhaps there's something moderately reassuring about a company that's a true economic bellwether capping the wildest week in recent market memory by telling us about its results that, while somewhat spotty, could have been worse. But for my money, the news should have included plans for an ambitious restructuring in Connecticut.
On Friday, General Electric
And there were other areas of both strength and weakness. For instance, the energy infrastructure unit -- which operates under respected brands such as VetcoGray and Hydril -- increased its profits by 31% from a year ago. NBC Universal also benefited from the Beijing Olympics, thereby chalking up 10% profit growth. The consumer and industrial segment, much of which is slated for sale or spinoff to shareholders, recorded an 82% drop in its profits.
According to CEO Jeff Immelt, the company's total backlog is now at $170 billion, up 20% from a year ago. Beyond that, GE recently raised $15 billion, including selling a $3 billion stake to Warren Buffett and Berkshire Hathaway
So what we appear to have at GE today is a distinctly bifurcated company. On the one hand, there's the financial segment, which I'm betting will continue to struggle, along with consumer and industrial, which we already know will be jettisoned. On the other, there are the stronger technology and energy units, along with NBC.
Were I in Immelt's shoes, I'd consider severing the financial unit, so that its ongoing weakness -- and potential implosion -- wouldn't be able to destroy the rest of the company if and when. I mean something doesn't appear right. A company this size doesn't raise $15 billion on a whim mere days after saying it wouldn't sell new equity.
I'd then use my kitty to add industrial units that would benefit from an association with my current areas of strength. Somewhat draconian, maybe, but it seems the result would be a far stronger General Electric.
So GE has followed IBM
Beyond that, amid the current economic meltdown, and until I hear that radical surgery is planned by Mr. Immelt, I'm not a buyer of the company.
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