Jan. 12 (Bloomberg) -- General Electric Co. may use proceeds from selling its plastics unit to buy health-care technology developers as well as energy services and equipment makers to tap faster-growing markets.

The world's second-biggest company by market value is seeking as much as $10 billion for the plastics unit, people with direct knowledge of the auction said. Chief Executive Officer Jeffrey Immelt has spent almost $70 billion on acquisitions since taking the helm in 2001, and GE may focus on healthcare, aerospace, energy services and oil-drilling equipment next.

``They want to continue to bulk up,'' said Stephen Hoedt, an analyst with National City Corp. in Cleveland, which owns more than 21 million shares of GE.

Potential targets for Fairfield, Connecticut-based GE include instrument maker Waters Corp. and software makers Vital Images Inc. and Allscripts Healthcare Solutions Inc., said Ross Muken, a health-care analyst at Deutsche Bank Securities in New York. Energy possibilities include oilfield-equipment makers Cameron International Corp., FMC Technologies Inc. and Dril-Quip Inc., said Stacy Nieuwoudt, an analyst with Houston-based consultant Pickering Energy Partners.

Stocks Gain

Merrill Lynch & Co. analysts John Inch and Elana Hordon Wood said today that GE may spend tens of billions of dollars on an acquisition. ``GE has the capital capacity to do something much larger if they choose,'' Inch said in an interview.

Dril-Quip shares climbed 4.3 percent at 4 p.m. in New York Stock Exchange trading. FMC rose 4 percent. Waters added 1.8 percent, Allscripts gained 3.7 percent, and another health IT company mentioned, Cerner Corp., gained 4.9 percent.

GE spokesman Russell Wilkerson, Waters spokesman Gene Cassis and Cameron's R. Scott Amann declined to comment. FMC spokesman Bruce Bullock, Dril-Quip Chief Financial Officer Jerry Brooks, Vital Chief Operating and Financial Officer Michael Carrel and Allscripts spokesman Todd Stein didn't return calls.

GE shares fell 3 cents to $37.89. They gained 6.2 percent in 2006, better than the 4 percent drop in 2005 and still less than the 14 percent gain in the Standard & Poor's 500 Index.

Shares of Zurich's ABB Ltd., the world's largest builder of electricity networks, rose 2.1 percent and Paris-based Schneider Electric SA, the biggest supplier of circuit breakers, gained 0.7 percent, on speculation the companies might be targets.

Thomas Schmidt, a spokesman for ABB, declined to comment. Schneider spokeswoman Veronique Moine wasn't available.

Big Five

Immelt, 50, has identified five areas he wants GE to pursue, which he calls the company's ``growth platforms.'' They include health-care information technology, oil and gas, security and sensing, water treatment and Hispanic media.

Last month, he said those groups brought in $13 billion in sales in 2006 and forecast as much as 20 percent growth in 2007, in part through acquisition. Overall, he said he expects GE's profit to increase as much as 13 percent next year.

Buying industrial companies is important because investors value those assets more highly than finance businesses, which account for about half of GE's sales now. Immelt said last month that stepping up investment in non-finance divisions makes a ``better overall blend'' for shareholders.

GE this year intends to buy about $7 billion in non- financial assets, he said. That figure probably excludes any deals funded by plastics unit proceeds, Hoedt said.

``It's reasonable to think they would be able to redeploy the potential sale of plastics into more strategic areas like healthcare and avionics,'' said Credit Suisse analyst Nicole Parent, who has an ``outperform'' rating on the stock.

Quick Return

``Take these proceeds and reinvest them into higher-growth, higher-margin businesses, and the net effect can be positive in a fairly short period of time,'' said William Batcheller, director of investment at Butler Wick & Co. in Youngstown, Ohio, which owns about 700,000 GE shares.

The health-care information technology unit opened when Immelt was running GE's broader medical division, and expanded last year by buying South Burlington, Vermont-based IDX Systems Corp., which develops software for hospitals.

The health IT market may be on the verge of a boom as the industry seeks to make systems that work together, said John Morrissey, knowledge director at the National Alliance for Health Information Technology in Chicago.

Right now, as few as 5 percent of physicians' offices have an electronic medical record system, Morrissey said.

``There's a huge opportunity,'' he said.

Health Targets

GE said in November that its health-care IT revenue has probably more than doubled to $1.7 billion in 2006 from $800 million in 2003. GE Healthcare, which includes the world's biggest maker of medical imaging machines, is forecast to report about $17 billion in revenue for last year.

Deutsche Bank's Muken also identified as possible targets genetic analysis company Illumina Inc. of San Diego and Carlsbad, California-based biotechnology researcher Invitrogen Corp., run by Greg Lucier, who once worked in GE's medical business.

``They have long-term benefits of highly attractive markets, nice margin structure, a lot of recurring revenue -- the kind of businesses where GE can make high capital returns,'' he said.

Other companies in the health-care IT market include Cerner, in Kansas City, Missouri, and Eclipsys Corp., in Boca Raton, Florida, said Glenn Garmont, an analyst with First Albany Capital Inc. in New York.

Cerner spokeswoman Jennifer Bosshardt declined to comment, and Invitrogen's Eric Endicott had no immediate comment. Illumina spokeswoman Maurissa Bornstein and Eclipsys's Jason Cigarran didn't return calls.

Aerospace possibilities include U.K.-based Smiths Plc and Cedar Rapids, Iowa-based Rockwell Collins Inc., said Phil Finnegan, an analyst at Fairfax, Virginia-based Teal Group.

Collins spokeswoman Nancy Welsh declined to comment. Calls and e-mails to Smiths spokesman Chris Fox weren't returned.

Sub-Sea Drilling

Sub-sea drilling may be another push, to capitalize on demand for petroleum exploration. GE this week agreed to buy drilling-equipment maker Vetco Gray Inc. for $1.9 billion.

``GE is not really in the game to be the No. 3 or No. 4 player,'' Nieuwoudt said. ``Eventually, there might a next-step acquisition.''

The offshore drilling market is in its biggest boom as companies such as Exxon Mobil Corp. seek new reserves amid oil prices that reached a record in July. The Vetco purchase signals that GE expects exploration and production activity will hold up for the next few years, Nieuwoudt said.

Not everyone is convinced. GE may just have wanted to round out its line of pumps, turbines and compressors, rather than signaling a broad move into sub-sea assets, Inch said in a separate note. He said a purchase of Houston-based Cameron or FMC, also based in Houston, is ``not likely.''

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net; Duncan Moore in Chicago at Dmoore35@bloomberg.net.

Last Updated: January 12, 2007 16:15 EST