General Electric Co.’s (NYSE: GE) current management never has liked being reminded of the conglomerate’s share price when superhero CEO Jack Welch left almost 12 years ago. Shares traded at approximately $37 when he departed in 2001. Today the price stands at less than $23, a reminder that during the past decade GE has been driven in reverse. The most recent reminder of this were comments by current CEO Jeff Immelt that the public corporation’s big industrial division should do well in the near future because of demand for aircraft engines and medical devices — particularly in the emerging world. Occasional optimism by management rarely impresses a skeptical market.

In an effort to get a better return for shareholders, GE has been restructured several times, but not much. It dumped its entertainment division, but that did not boost revenue at its financial services division. And, in GE’s most recently reported quarter, operating income at its aviation and health care units dropped. GE has not fired on all cylinders for years, which has been the primary cause for worry about it on Wall St.

Forecasts of GE’s near-term future are not much better than its recent results. Analysts expect earnings to be $0.36 per share in the September quarter compared to $0.31 a year ago. Revenue is expected to grow a little over 3%.

Suggestions from outside about what GE should do have been numerous. One suggestion is that the company should be broken into smaller pieces. How that will help slow-growing businesses is difficult to see. Other critics want Jeff Immelt to be replaced. Immelt seems to spend nearly as much time in Washington and being interviewed by the Financial Times as working on his primary job, but that perception is really not true. Could new management repair a company with nearly $150 billion in sales? A change at the top of GE would be gamble. Who could do better than Immelt? Maybe one of his deputies, but all are part of the system that has created mediocre results. Not many outsiders could grasp GE and its problems for a long while after taking the CEO role. GE is far too complex.

GE is actually part of a breed of massive and unwieldy companies, based in the United States and abroad, that are unlikely to be helped by any radical action. The list includes a diverse group of public corporations ranging from Wal-Mart Stores Inc. (NYSE: WMT) to Citigroup Inc. (NYSE: C) and Procter & Gamble Co. (NYSE: PG). They are too big to grow much, and too dilapidated to be restructured with any good effect.

All that is left for them to do to help investors is raise their dividends, which speaks volumes.

Douglas A. McIntyre

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