=DJ GE Welch-Depart -2:GE Still Seen As Aggressive Acquirer
Under CEO-elect Immelt, GE should continue be an aggressive
acquirer, undaunted by its stumble with Honeywell. "They have the
resources to maintain their 100 or so acquisitions a year," said Fiala
of Edward Jones. These deals should be more modest than Honeywell.
"I would be surprised to see anything on the order of Honeywell
anytime soon," said the analyst.
"Immelt is taking over during a period of economic weakness;
however, earnings growth at GE is relatively strong over the next few
years," said Fiala, citing GE's strong backlog and strong long-cycle
businesses. This, according to the analyst, should buy Immelt a
honeymoon period.
GE will begin to face the challenge of maintaining its double-digit
earnings growth rate in 2003, when the power systems operation reaches
its cyclical peak, according to Fiala, who has a hold on the stock due
to valuation and "challenges down the road."
Sheffer of GE declined to comment on whether GE needs to do another
Honeywell-type deal to hit its earnings target. He said only that GE
is "on track for another good year" and the company "is always looking
for strategic growth opportunities, in its industrial and GE Capital
businesses."
Sheffer suggested GE has come through its regulatory battle with EU
regulators intact - just smarter. "We went through a very intensive
integration process," said Sheffer. "We're better at doing this now
than last October."
With a relatively healthy business and strong management, GE can
afford such a positive outlook. That's harder to come by for
Honeywell, GE's merger partner, which is battling some weakened
operations and a potential big management shakeup. The Wall Street
Journal reported Tuesday that Honeywell is set to oust Chairman
Michael Bonsignore.
Another potential problem for Immelt could be having to deal with a
disappointed and litigious Honeywell, which, according to company
watchers, may be inclined to sue GE if it believes GE failed to do all
it could to get the deal successfully through the regulatory process.
Honeywell pushed hard for the deal, offering to amend the merger
agreement at the last minute. Its overture was roundly rejected by
Welch.
Sheffer said he doesn't know if the companies have spoken Tuesday,
following the EU's decision to block the deal. But he said the
GE-Honeywell relationship remains a good one and the "channels of
communications are open."
Honeywell has declined to comment on the EU's decision.
-By Christopher C. Williams, Dow Jones Newswires,
201-938-5219; christopher.williams@dowjones.com
(END) DOW JONES NEWS 07-03-01
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=DJ With Honeywell Deal Dead, Welch Soon To Depart >GE
By Christopher C. Williams
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--The Welch watch is on again at General
Electric Co. (GE).
The legendary GE Chairman Jack Welch is expected to soon depart the
company he led for 20 years, ending one of the most admired corporate
tenures in history. Welch named Jeffrey R. Immelt his successor last
year, but he stayed on to oversee the acquisition of Honeywell. He was
expected to stay until the end of 2001. But now that the European
Commission has blocked the $40-plus billion deal, Welch is expected to
leave well before the end of the year.
"It wouldn't surprise me now that the deal is officially dead that
Welch officially announces his retirement," said analyst William Fiala
of Edward Jones.
No date is set, but GE spokesman Gary Sheffer noted Welch has always
said he'd leave once the Honeywell deal is concluded. It wasn't the
conclusion he was looking for, but Welch will keep to that outlook.
"He'll make the decision at his own time," said Sheffer.
Welch will leave his successor, 45-year old Immelt, the stewardship
of arguably the most respected and successful conglomerate in the
world. But Immelt will have his work cut out for him. Most of GE's
operations, particularly power systems, continue to be excellent
performers, but Immelt is expected to keep the $130 billion company
growing at an annual double-digit pace in a weakening economy, an
enormous challenge even in the best of times. Some on Wall Street
think GE will have to run faster to meet its earnings target without
Honeywell.
Another challenge: To keep GE's stock, which ended a long string of
outperformance last year, growing strong. The stock had faltered amid
concerns over Honeywell acquisition and the weakening economy.
Immelt is viewed as a potentially strong leader for GE, groomed for
years under Welch. Many company observers noted it was Immelt who told
the French paper Le Monde that the deal had zero chance of passing
regulatory muster. Immelt also maintained that GE should continue to
grow earnings by a double-digit pace this year. He is officially
running the show, they say.
One positive effect of the failed Honeywell deal for Immelt? He
doesn't have to try to integrate the operations of a faltering
conglomerate, suggested Fiala. "It makes the succession easier for
Immelt," said Fiala.
Even without Honeywell, however, Immelt will have his hands full
learning about GE, a very complex business, said the analyst.
In NYSE composite trading, GE was off 75 cents to $48.45 on volume
of 11.7 million shares, compared with average daily volume of about 21
million.
(MORE) DOW JONES NEWS 07-03-01
12:51 PM
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