GE stock stumbles to lowest point since 2003

"Based on recent developments, it would appear as though accountability for hitting targets is the top priority, and some managers might be chasing earnings," Tusa wrote to investors. "We also think the high bar for success in such a competitive environment could create a scenario in which bad news is not tolerated, making necessary communication with senior level managers a challenge until it's too late to fix."

Tusa lowered his 2009 earnings outlook to $2.30 per share from $2.42. Analysts polled by Thomson Financial expect earnings of $2.44 per share.

The first-quarter earnings put additional pressure on GE to continue exiting slower growth and more volatile businesses. The company, which has already sold its insurance and plastics businesses, announced last month that it will sell or spin off its appliance business, which has been hurt by the U.S. economic downturn.

Another analyst, Nicholas Heymann of Sterne Agee, maintained GE's stock rating as a hold Monday.

"While GE originally hoped that it would be able to move through its portfolio changes in 2008 and 2009 and still sustain double-digit earnings growth, a more challenging and highly volatile global economy has now made that far more remote," Heymann wrote.

"As events unfold regarding the reshaping of GE's portfolio, we believe investor confidence in the company's ability to return to double-digit earnings growth is likely to gradually rebound."

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Associated Press writer Dan Strumpf in New York contributed to this report.