General Electric: industrial strength? - FT.com Jeff Immelt wants General Electric to be an industrial company first. That may be the good news. Unfortunately, it has been the bad news too. Last week the GE chief executive elaborated on his plans to streamline GE Capital, the conglomerate's financial arm. He said the company could do an initial public offering in lieu of asset sales of unwanted portions of the finance business. It is a canny move when the strength of equity markets is juxtaposed with a tepid M&A market. But with an emphasis on the industrial side of GE comes accountability, and accountability has so far meant underperformance - the shares are up 12 per cent this year while Honeywell and United Technologies are up 25 per cent and 16 per cent respectively. Still, removing the extraneous elements of GE Capital makes sense. The bits that lend to businesses face the same dynamics as the parent's industrial businesses, while consumer lending, though lucrative, introduces unnecessary volatility. The consumer segment makes up a quarter of GE Capital's profit. GE aspires to have the financial business accounting for only 30 per cent of group earnings. In the most recently completed quarter, however, weak results and outlook for the industrial business resulted in GE Capital contributing 40 per cent of earnings. And the shares responded to this industrial softness by falling 4 per cent. What is more, GE has set a long-term industrial organic growth target at 5 to 10 per cent, but expects this year to come in lower than that. Thus GE is doing what many big companies with weak revenues do: using dividends and share buybacks (it wants to reduce shares 10 per cent by 2015) to goose shareholder returns and hope the market gives it leeway to fix the top line. The trouble is that when rivals such as Honeywell deliver on sales and profits, investors tend to prefer those shares.