GE modestly higher as investors mull co's strategy defense

General Electric Co's shares were posting a modest gain in midsession trade as investors pondered the defense the company issued to counter a prominent bond fund manager's criticisms of its debt load, dealers said.

At 11.45 am, the stock was up 32 cents, or 0.85%, at 37.77 in a generally lower market. The DJIA traded down 40.82 points at 10,439.02 and the Nasdaq composite down 6.66 at 1,862.17.

Dealers said the stock had traded higher in prebourse trade, then opened lower and changed course several times.

They attributed the volatility to technical factors and to investors' mixed emotions about GE's statement late yesterday that it and unit GE Capital will continue to fund a portion of their operations with commercial papers.

In response to media and investor inquiries, GE chief financial officer Keith Sherin said as a commercial paper issuer, GE Capital is in the process of increasing its backup bank lines to $50 billion from 33.5 billion, appropriate with current market conditions.

"GE is committed to maintaining its triple-A ratings and continuing its deep and broad access to global capital markets," Sherin said in a statement.

Global Investments chief equities strategist Peter Cardillo said investors overall believe that GE should have no trouble preserving its top credit rating.

However, some investors remain hesitant about the company, given the mood of distrust that has emerged in the wake of the Enron Corp bankruptcy and the highly critical remarks by Pimco Total Return Fund Bill Gross, Cardillo said.

Gross said he sold $1bn of General Electric Capital Corp's short-term debt to send the message that he believes GE is not providing enough information to investors and may be too highly leveraged.

Cardillo said: "Once the seed of suspicion has been planted about a certain situation people continue to be hesitant."

"Although the company has given assurances, not all people are buying it."