• GE has used this process to restructure its portfolio -- selling businesses -- most notably it is in the process of selling GE Plastic to a Saudi Arabian company (GE could not get access to petrochemical raw materials at attractive prices) and it spun out its insurance business as Genworth (GE did not like being exposed to hurricane risks every year).
• GE has acquired $80 billion worth of businesses since Immelt took over
• Although revenues in GE Healthcare are down in the first half of 2007 due to a drop in Medicare reimbursement rates for some of its products, Sherin thinks that new technology will emerge in the next few years which will boost its revenues.
• Despite being the fourth-ranked network, Sherin estimates that GE's NBC Universal is worth between $40 billion and $45 billion.
• GE's Appliance business earns a 70% ROTC because its assets are heavily depreciated and it outsources manufacturing to China while doing product design and marketing itself.

If I managed GE, I would try to find one huge investment trend on which to focus. I think that trend could be the huge boom in infrastructure investment by countries such as Saudi Arabia, Russia, and China. These countries were made wealthy by the increase in the price of oil and are seeking to develop their economies. GE seems to enjoy a competitive advantage in businesses like energy, aircraft engines, water, and commercial finance.

Why not focus on these and exit the rest?

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This is the second in a series of posts following a lunch I and fellow blogger Jon Ogg had with GE's CFO Keith Sherin:

• The first post examined NBC Universal and the surprisingly high valuation of between $40 billion and $45 billion.
• The third post discusses GE as an investment play on emerging markets infrastructure buildout

Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns General Electric stock.