GE restructures, but investors still on edge

By Scott Malone

BOSTON (Reuters) - General Electric Co (GE.N) kicked off a major round of restructuring on Friday, giving its booming infrastructure business -- which is riding a wave of emerging-market investment in energy and aviation projects -- a more prominent role, and combining its sprawling finance operations into one unit.

The moves, which also set the stage for the planned spin-off of GE's historic $13 billion appliance and lighting unit, will not silence calls on Wall Street for the second-largest U.S. company by market capitalization to revamp itself and spark its moribund shares, investors said.

But it could signal the start of a more extensive revamp, including a broader pull back from the volatile consumer finance market and a disposition of NBC Universal

media, analysts and investors said.

"It doesn't take the pressure off," said Peter Sorrentino, senior vice president and portfolio manager at Huntington Asset Advisors in Cincinnati, which manages $6.5 billion in assets and counts GE among its holdings.

"These businesses, I don't care what buckets you put them in, we want results," Sorrentino said. "I don't care how you organize the deck chairs, is the boat sinking or are we running at full throttle?"

SIX UNITS TO FOUR

The moves combine what had been six GE segments, into four.

"With the announcement of our focus on a possible consumer and industrial spin-off, we can structure the company in a simpler way that can maximize future growth," GE Chairman and Chief Executive Jeff Immelt said in a statement.

GE's infrastructure arm, its largest business, splits into two divisions: GE Energy Infrastructure and GE Technology Infrastructure, which absorbs the health care division.

NBC Universal media remains a stand-alone segment.

All of GE's consumer and commercial finance operations -- both the stand-alone GE Money and GE Commercial Finance divisions and the industry-specific finance arms that had been tucked inside other GE divisions -- will merge into one unit called GE Capital.

"That is certainly a positive, putting the financial services businesses together," said Matt Collins, capital goods analyst at Edward Jones in St. Louis. "That should help investors get an absolutely clear sense of how financial is doing versus industrial."

When GE stunned Wall Street with its unexpected drop in first-quarter profit, the company attributed the shortfall to troubles at its finance arms. Since then its shares have tumbled, and remain down 22.5 percent for the year -- deeper than the 14.3 percent slide of the blue-chip Dow Jones industrial average -- even after a return to profit growth in the second quarter.

Investors attribute much of the slump in GE's shares this year to worries about the sprawling finance arms. GE also on Friday said it had received notice from the U.S. Securities and Exchange Commission that it was contemplating civil action against the company over the way certain former employees of its finance operation bid on municipal securities.