GE today confirmed that it was reviewing "strategic options" for its appliances business (See: General Electric to sell appliance business: report) . The company is currently considering three possibilities for the unit: a strategic partnership or joint venture; spin off; or the sale of the business.
Last month GE chairman and CEO Jeffery Immelt had presented a combative face before the company's annual general meeting and said he would resist calls to shrink GE beyond an existing plan for reducing the company's consumer businesses in slowing economies, even as recent poor results prompted calls from shareholders and analysts to hive off certain businesses.
In today's statement, Immelt's said, ''This review is consistent with the strategy we have been executing to transform our portfolio for long-term growth. Since 2003 we have exited slower growth and more volatile businesses, generating $52 billion in gross proceeds from dispositions. These proceeds have been reinvested into a transformed portfolio of faster growth, higher margin businesses, stock buybacks and other restructuring activities.
''GE Appliances has a very strong brand, great distribution, a talented leadership team and for more than 100 years, has been one of the icons associated with GE in the United States,'' Immelt said. ''However, it remains primarily a US business, meaning its fortunes are tied to the rise and fall of a single market. We want to make this good business great again by finding the right strategic solution – a solution that will give Appliances the global reach and investment required to compete more effectively,'' Immelt said.
''Jim Campbell and the appliances leadership team have done a great job running the business and I am pleased that they have agreed to remain at the business,'' Immelt said. ''Their leadership has been critical in creating world-class products like GE Monogram, GE Café and a wide range of Energy Star-certified appliances.''
GE Appliances is part of GE Industrial's consumer and industrial division, which also includes the lighting and electrical distribution businesses. Those units will remain part of GE's industrial platform. Both businesses are global and fit well with GE's environmental initiative, ecomagination.
GE shares had declined the most in two decades on 11 April, when Immelt reported a 12-per cent decline in first-quarter earnings and said annual profit would trail his $2.42-a- share target. This target miss, which he blamed mainly on credit-market turmoil, renewed analysts' calls for GE to sell off larger chunks of the company such as NBC Universal or consumer- finance unit GE Money. (See: GE downed by credit woes in Q1 2008; reports first decline in profits since 2003)
Calls for streamlining the giant conglomerate are not new. Even a year back, even before the sub-prime mortgage crisis broke, analysts had recommended a sell off of GE Money, the NBC Universal television, film and media unit, and the real estate divisions. ( See: For a detailed analysis on GE's current woes, see: General Electric shock and after)
Louisville-headquartered GE Appliances is a $7.2 billion business and employs about 13,000 people worldwide.