GE's Rice sees share price undervalued

NEW YORK (Reuters) - General Electric Co.'s (GE.N: Quote, Profile, Research, Stock Buzz) stock is undervalued, but the market will over time realize its potential and ultimately that will be reflected in the share price, the head of its industrials division said on Wednesday.

John Rice, a vice chairman of GE who runs the company's industrial segment, said he was frustrated that changes made by Chief Executive Jeff Immelt to retool the business had not been reflected in GE's stock.

Immelt, who succeeded former Jack Welch as CEO on Sept 7, 2001, has sought to transform GE into a more technology-driven company, one whose businesses range from healthcare to aerospace to television.

But GE's share price is down about 12 percent since Immelt took over. The stock on Wednesday was down 11 cents at $34.75.

"We all care a lot (about the stock price)," said Rice, speaking at the Reuters Manufacturing and Transportation Summit in New York. "Mostly because we know our performance ... and the things that we've done to retool the business, the big decisions we've made... and over time we think that the market will see that and reward great performance."

Rice said he thought the stock was undervalued, adding that analysts following GE were saying that the stock "ought to be in the $40s in the next 12 months".

Legendary value investor Warren Buffett seems to have the same opinion about GE's stock.

Buffett's Berkshire Hathaway Inc. (BRKa.N: Quote, Profile, Research, Stock Buzz) (BRKb.N: Quote, Profile, Research, Stock Buzz) said on Wednesday that, as of March 31, it owned 7.78 million GE shares worth $270.5 million. Buffett also praised GE company management in a recent Fortune magazine article.

Rice was named as a vice chairman in June 2005, when GE announced a streamlining of its businesses and a management reshuffling aimed at retaining the most sought-after senior executives at the company.