GE Breakup Discussion Today on CNBC

In fairness to my post yesterday, there was an accidental, spirited discussion this morning on CNBC regarding its parent, GE, being split up within two years.

Guests on the program, fund manager Mike Holland and Andrew Ross Sorkin, of the New York Times, along with CNBC reporter David Faber, began by discussing whether private equity firms are the new conglomerates. All missed the fundamental difference between the operating models.

Faber waxed nostalgically as to how GE has 'operating acumen,' while private equity funds just 'buy companies cheaply and sell them more dearly.' Not quite, David.

In fact, GE has shown an inability to operate its business units in a manner that has drawn investor reactions which result in consistently superior total returns. In contrast, private equity firms buy ailing or undervalued businesses, make necessary changes to increase their value, then, typically, resell them and reap a return for the value they have added.

Joe Kernen then asked why NBC/Universal should not be sold, and nobody disagreed. Fabe's first comment was 'why are you doing this to me,' followed by some mumbling about losing his job. The video of this whole exchange is available today, for free, on CNBC's site, but I won't paste the link, as it will become inoperable by tomorrow.

Sorkin predicted that GE will sell its entertainment unit after the Chinese Olympics, when its value may be at a maximum. Mike Holland seconded Sorkin, and predicted that it was likely to be sold or spun-off at the end of two years. However, nobody went further, castigating Immelt for failing to create value from the various parts of GE. The focus remained simply on CNBC/Universal, stay or go?

So, my hats off to CNBC's Squawkbox for having the guts to discuss splitting up its parent, beginning with the unit of which the network is a part. However, lets be clear- the conversation topic was one comparing private equity to large corporations, and Kernen simply made a sharp left turn in the discussion to toss out the GE situation. But to their credit, the producers didn't cut suddenly to a commercial and end the segment.

Not surprisingly, since last week, CNBC has covered the alleged call to break up CitiGroup more than the CitiGroup analyst's call to break up GE.