"Frustrated" GE investors hungry for direction

By Nick Zieminski

NEW YORK (Reuters) - General Electric Co's shocking first-quarter earnings miss prompted some analysts and investors to question whether the company needed to break up or at least sell off some poorly performing businesses.

But others said they remain patient, even though the share price has now dropped 2.5 percent in the seven years since current Chairman and Chief Executive Jeff Immelt took over at the conglomerate on September 10, 2001.

The shares have also underperformed the broader market in that period -- the Standard & Poor's 500 index has gained 22 percent since Immelt took over. GE's shares fell almost 13 percent on Friday after the company's first-quarter earnings disappointed Wall Street. For more on the company's results, see the main story at.

"(The miss) forces the focus back to the portfolio," said Nicholas Heymann, an analyst with Sterne Agee in New York. "The portfolio has to change."

Heymann singled out the media and entertainment arm, NBC Universal and the health care arm as facing poor prospects in the near-term.

On GE's almost two-hour conference call on Friday, analysts repeatedly asked the company's managers whether they needed to rethink strategy and whether a structural shake-up was in order.

One analyst, Scott Davis of Morgan Stanley, compared GE to the Chicago Cubs baseball team -- always showing promise, never delivering results.

"Maybe GE Capital and GE Industrial shouldn't be together anymore," he told GE's Immelt on the call.

Immelt answered: "No matter what form the company is in, it is about driving revenue growth, earnings growth ... We will see when this year ends how we stack up against everybody else."

SHOOTING STRAIGHT

Analysts on the call were "just totally negative," said Al Meyers, co-manager of the AHA Diversified Equity Fund, which owns GE shares.

"You either believe management or you don't," Meyers said. "I think management was shooting straight."

GE should take advantage of its triple-A credit rating by snapping up bargain assets for its finance operations, he said, rather than by getting out of the business because times have gone bad.

"Why in the world would you sell it now?" Meyers said. "If you were going to sell it, you should have sold it two years ago, at the top of the market."

On the other hand, GE is taking the right steps by trying to reduce its exposure to consumer finance, said Meyers, who owns GE stock for its international sales and because of prospects for infrastructure demand.