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Non-Tech : General Electric (GE)

GE 325.00

+0.2%

10:59 AM EST

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To: College Boy who started this subject	4/1/2001 12:24:11 PM
From: Ally	Read Replies (3) of 3256

Even if the economy were to recover (i.e no recession), there are the two key challenges facing GE: 1. Will Immelt be able to match Welch's charisma and talent? A lot will depend on how the market view Immelt. Welch was almost a legendary figure and a first rate CEO. In 1995, CE stock could be bought at $12 (after adjusting for splits). Welch did everything right and the stock price rose 5 times to $60. A high multiple is more than just earnings growth.. it's credibility in the leader. I see this as a key challenge for the new CEO. Unless the market is impressed with him, the stock will remain in a low PE range. 2. Integration of Honeywell... this is no easy task, and would take at least a year (if not more) for the synergies to be realized (if at all). So, I see GE at most a trading stock at this time. It is too early to buy and hold for investment. The multiple is still high (Welch's effect is still at play) and has more room to shrink, especially if earnings were to also shrink.

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