Analysts' estimates for

General Electric

(GE) - Get Report

this year are beginning to look like a stretch.

GE delivered few surprises Friday as it matched analysts' expectations for the first quarter and reiterated its guidance for the full year. The company posted a profit of 32 cents a share and said it remains comfortable with its full-year earnings forecast of $1.55 to $1.70 a share, representing growth of 2.5% to 12.5% over last year.

Because that range is so wide, GE stands a good chance of meeting its own projections in 2003, but the consensus estimates, as measured by Thomson Financial/First Call, might be overly optimistic.

Analysts are currently looking for earnings growth of 7% this year to $1.62 a share, but Brett Gallagher, head of U.S. equities at Julius Baer Investment Management, questions whether that number is achievable.

"I think 7% is within the realm of possibility, but I think it's aggressive," he said. "GE is going to grow at the pace of the global economy and I don't think the global economy is going to show that dramatic a growth rate."

Save It for Later

General Electric's earnings, like the rest of the market's, are "back-end loaded," meaning that most of the growth must come in the second half of the year. Without a big upswing in the economy down the road, some analysts worry that the company could end up disappointing investors.

GE's profits will most likely fall 11% in the first six months of the year amid weakness in its power systems and plastics businesses. In the first quarter, the conglomerate said power systems profits fell 42% from last year while earnings at its plastics business skidded 56%. The trend isn't likely to change much in the second quarter.

The power systems unit, which is still more profitable than any other business line, has seen earnings deteriorate as capital spending on gas turbines has slowed sharply after several years of strong growth. Meanwhile, plastics are being affected by much higher raw-material costs. Consumer products, insurance and equipment management also produced disappointing results in the first quarter.

Sugar and Stress

Jeff Graff, a portfolio manager at Victory Capital Management, said he believes GE can match analysts' expectations this year but that the upper end of the firm's own guidance is now unrealistic.

"I would expect the company to come in at the lower end of its guidance based on the recent trends and given the weak economy," he said.

GE's first-quarter earnings of 32 cents were down 8.5% from last year but in line with the firm's own estimates and those of First Call. The results exclude a 2-cent accounting charge. In the same period a year ago, GE posted a profit of 35 cents a share, excluding a 10-cent accounting charge. First-quarter revenue was lighter than expected at $30.3 billion. That's down from last year's $30.5 billion and below analysts' estimates of $30.6 billion.

Although GE's results were hurt by weakness at its power systems and plastics businesses, earnings at NBC rose almost 10% and profits at its medical systems unit were up 15%. Commercial and consumer finance also showed respectable profit gains. In fact, GE said eight of its 13 businesses delivered double-digit earnings growth in the quarter.

Noise in This World

While the quality of GE's earnings was considered somewhat better this quarter, with lower securitization gains and a decline in pension income, some analysts wondered whether an unusually low tax rate in the financial services segment helped the firm boost results. That said, GE noted that the industrial tax rate was actually higher this quarter than it will be for the rest of the year.

During a conference call Friday, CEO Jeffrey Immelt reaffirmed that he expects GE to post a profit of between 37 cents and 39 cents a share in the second quarter, down 15% from a year earlier. Analysts surveyed by First Call are looking for a 38-cent profit, down from 44 cents in the same period a year ago.

"The company is making an effort to divert its resources towards faster growing businesses over the long term," said Graff. "But a lot of its businesses are cyclical and they're not always going to grow 10% year in year out."

Shares of GE were up 29 cents to $27.46 Friday.