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GE said it expects second-quarter profit to decline as much as 15 percent. That means the conglomerate needs a big rebound in the second half of the year to meet 2003 profit goals.

Analysts said many investors have written off 2003 as a transition year as GE moves to unload some assets, such as low margin insurance lines, while investing in growth markets, such as consumer lending.

Easier comparisons at GE's reinsurance unit, which took a big charge in the fourth quarter, will help the company post earnings growth in the second half of 2003. And 75 percent of the decline in turbine sales will be absorbed in the first half of the year, GE executives said.

"There are already investors looking ahead to 2004, if not a majority of investors," Kerry Stirton, an analyst at Sanford C. Bernstein, said. "It's still somewhat of a transitional year."

GE Chairman Jeff Immelt told investors during a conference call that he wants to rid the company of "capital traps" and put that money toward growth businesses. Analysts speculate GE will sell pieces of its insurance unit.

"2004 should be just a great year for the company," said Stirton, who has an "outperform" rating on GE shares.

But Standard & Poor's equity analyst Robert Friedman said GE is too big to grow at double-digit percentage rates.

"Moreover, their strategy of running a business portfolio where certain outperforming segments that cover for underperforming segments, and they can still grow at a 10 percent rate, clearly is not working," Friedman said.

STOCK NOT AT 'BARGAIN LEVELS'

"Investors in the past have paid very high premiums just for those expectations," he added. "Although the prices have come down tremendously and the multiples have re-entered the atmosphere, my sense is that you're still not buying the stock at any bargain levels."

For the past year, the Fairfield, Connecticut, company has said earnings would decline at its power systems unit, which makes gas turbines, as capital spending on power-generation facilities has slowed.

GE Power Systems still produced more quarterly profit than any of the company's other businesses, which range from television broadcasting to jet-engine manufacturing.

Profit at GE Plastics, whose products are in everything from compact discs to automobile bumpers, tumbled 56 percent on higher costs for raw materials like oil and benzene. The results fell below what GE had forecast in January, when it said the unit's profit would slide no more than 15 percent.

The company reported first-quarter earnings of $3.2 billion, or 32 cents a share, before a required accounting change, down from $3.5 billion, or 35 cents a share, a year earlier.

The results were in line with GE's own forecast and the analysts' average estimate, according to Thomson First Call (News - Websites).

GE shares were up 2 cents to $27.40 in afternoon New York Stock Exchange (News - Websites) trade.

Immelt said he remains comfortable with the company's full-year earnings forecast of $1.55 to $1.70 per share, or 3 percent to 13 percent growth over 2002. The broad range indicates some uncertainty in GE's outlook.

First-quarter revenue fell 1 percent to $30.3 billion because of fewer gas turbine sales and less revenue from NBC television, which in the year-ago period benefited from its Winter Olympics coverage.

The company's power systems business shipped 33 heavy-duty gas turbines in the quarter, down from 69 a year earlier. But the unit landed a $900 million deal during the quarter with China, which agreed to buy 13 gas turbines.

Victory Capital Management analyst Jeff Graff said he was impressed by the performance at GE's jet engine business, which posted a 13 percent profit increase despite turmoil in the commercial airline industry.