GE Flies on Split Rumors and Upbeat Earnings News
By Cindy Christ

General Electric Chairman and Chief Executive Jack Welch brought good news to Wall Street Tuesday.

Though he declined to comment on rumors of a widely anticipated stock split, he did say that GE would meet analysts' expectations of 15 percent profit growth in 1999 and that the company would meet or beat earnings projections for 2000.

Welch said he was comfortable with consensus projections of $3.22 per share in 1999, up from $2.80 last year. He expects earnings of $3.70 per share in 2000, a penny above consensus forecasts by First Call.

With shares trading at historic highs for weeks now, investors and analysts are predicting the company will announce a 3-for-1 or 2-for-1 stock split when its board meets Friday. Market watchers also expect that GE may announce a share buyback and raise its dividend by as much as 15 percent.

Since its founding in 1892, GE has split eight times. The last split was in 1997.

In a conference call Tuesday with reporters, Welch painted a rosy picture for GE's future, emphasizing the company's focus on e-commerce.

"There's a new meaning to the 'E' in GE - it's all about e -business," he said.

Welch also highlighted the company's growing investments overseas, especially in Asia where it has been buying up business assets at depressed prices. He said this year GE will spend $25 billion on acquisitions versus $21 billion for 1998.

In addition, Welch said that GE's $16 billion order backlog and long-term service agreements will deliver steady earnings for years to come. "They're 12 to 20 years in some cases," he said.

Widely considered as America's best and most influential corporate leader, Welch will retire in April 2001 after running GE since 1981. The company won't comment on whom might succeed him.

Based in Fairfield, Conn., GE is a diversified conglomerate With products ranging from jet engines and home appliances to financial services and the NBC television network and cable properties.

In a research note to clients Tuesday, Prudential Securities analyst Nicholas Heymann said he's expecting a split announcement Friday and maybe a share buyback. He also reiterated his "strong buy" rating on GE shares, raising his price target to $185.

Heymann estimated 2000 revenues will increase 12 to 17 percent, reaching $124 to $130 billion. This compares to 1999 revenues of $111 billion.

Due to expanded reliance on e-business applications, he predicts GE operating margins will expand to roughly 18 percent in 1999 and 19 percent next year.

After talking the e-commerce talk, GE made two announcements Tuesday proving it was walking the walk.

GE Capital IT Solutions said it would ally with Network Associates to provide e-business customers with customized network security.

The division also said it would use Network Associates' CyberCop products to prevent security problems in enterprise networks.

Also on Tuesday GE Capital said it had invested in edocs, a Internet billing software provider. GE Card Services, a unit of GE Capital, will use edocs software to offer online billing to its private label credit card customers like Wal-Mart, who represent more than 100 million accounts worldwide, the company said.

"GE Capital is a visionary organization that recognizes that Internet billing can be used to reinvent the way companies interact with customers. We are proud to have GE as an investor, and a customer," said Jim Moran, executive vice president and edocs co-founder, in a statement.

With assets of more than $300 billion, GE Capital is a global, diversified financial services company with 28 specialized businesses.

At the close, GE shares finished up $1.06, or 0.71 percent, at $149.80 after trading earlier at a new 52-week high of $150.50.

Through today, GE shares are up about 73 percent this year, trouncing the 15 percent rise in the S&P 500. If directors announce the best case scenario Friday - a 3-for-1 split and a dividend increase - look for investors to beat down the doors to get in on this world-class gem.