GE to sell its most visible division
General Electric Co., two months after placing its century-old appliance unit on the block, said yesterday it's likely to spin off the entire GE Consumer & Industrial group as it struggles to raise a slumping stock price.
A spinoff to shareholders would separate GE from more of its most well-known divisions, including electrical switches and the light-bulb business started by cofounder Thomas Edison. The company isn't ruling out a sale or other options for the group, which had 50,000 employees and $13.3 billion in sales last year, or about 7.4 percent of the company's total.
Chief executive Jeffrey Immelt, who lowered his 2008 profit targets in April, put the appliance division in play a month later and told investors GE might consider a spinoff of the broader group. Shareholders have called on him to speed divestitures to focus on businesses with more growth potential such as jet engines, energy, and healthcare. GE's stock has lost a quarter of its value this year.
Immelt, scheduled to release second-quarter earnings results today, said in April that the Fairfield, Conn., company may earn $2.20 to $2.30 a share in 2008, less than the minimum of $2.42 he predicted earlier.
Consumer & Industrial group's earnings would account for about 5 cents a share of GE's total this year, according to Citigroup Inc. analyst Jeffrey Sprague. "While the deal does not unlock value per se, it is a step toward improving the portfolio," wrote Sprague.
GE Consumer & Industrial is part of a larger group called GE Industrial, one of six major segments that will continue after the spinoff. The others are NBC Universal, GE Money, GE Infrastructure, GE Commercial Finance, and GE Healthcare.
