General Electric (GE) was made famous by its refrigerators and washer-dryers. Now those All-American staples will likely be made by a company halfway around the world as GE seeks to sell or find a partner for its appliance unit.
After a dismal earnings announcement last month, shares fell 13%, shaking an already battered Wall Street. With hopes of 10% annual profit growth, CEO Jeffrey Immelt, who took over from the revered Jack Welch in 2001, has been trying to cope with a struggling US economy while ditching slow-growing business units. Appliances are particularly sensitive to the the economy and are also a very mature industry. GE’s appliance unit only represented 4.1% of total GE sales in 2007, $7.2 billion of a total $172.7 billion.
Potential buyers span the globe: Haier (China), LG Electronics (South Korea), Samsung (South Korea), Bosch (Germany), Electrolux (Sweden) and Controladora Mabe (Mexico).
Analysts are already praising the move: “We would positively perceive a more aggressive approach to selling off slow-growth businesses,” Robert Schenosky from Jefferies & Co.
Yes, far better to concentrate GE even more in new All-American industries like finance, which can blow the whole conglomerate’s results to smithereens.