General Electric Co. chief executive officer Jeffrey Immelt presented a combative face before the company's annual general meeting on Wednesday. He said he would resist calls to shrink GE beyond an existing plan for reducing the company's consumer businesses in slowing economies, even as recent poor results prompted calls from shareholders and analysts to hive off certain businesses.
GE shares fell the most in two decades on 11 April, when Immelt reported a 12 per cent decline in first-quarter earnings and said annual profit would trail his $2.42-a- share target. This target miss, which he blamed mainly on credit-market turmoil, renewed analysts' calls for GE to sell off larger chunks of the company such as NBC Universal or consumer- finance unit GE Money. (See: GE downed by credit woes in Q1 2008; reports first decline in profits since 2003)
On 11 April, the company downgraded its annual targets for 2008. From $2.42 per share, the new predicted profit stands at $2.20 to $2.30 a share for 2008. First-quarter profit from continuing operations fell to $4.36 billion, or 44 cents a share. This was below the 51 cents estimated by Wall Street analysts. ( See: For a detailed analysis on GE's current woes, see: General Electric shock and after)
Calls for streamlining the giant conglomerate are not new. Even a year back, even before the sub-prime mortgage crisis broke, analysts had recommended a sell off of GE Money, the NBC Universal television, film and media unit, and the real estate divisions.
The current CEO has also done quite a bit in trimming GE of a lot of fat. Since taking over at the helm from iconic CEO Jack Welch in 2001, he has sold units with annual sales of about $50 billion, such as insurance and plastics, and protected GE's AAA credit rating while spending more than $70 billion to build higher-return areas such as power generation, aviation and commercial finance.
Additionally, he has shrunk GE Money's operations and is seeking a buyer or partner for its US consumer credit card unit. However, he is quite insistent on holding on to NBC.
In a brand-building exercise, he has also had a new brand commissioned in 2004, to unify the diversified businesses of GE. The brand included a change of the corporate color palette, small modifications to the GE Logo, a new customized font (GE Inspira), and a new slogan, "imagination at work" replacing the longtime slogan "we bring good things to life".