Friday, May 16, 2008

Will GE sell its appliance division?

Huh... I am used to expressing my opinion about companies, but I am not used to seeing them follow my advice. A month ago I recommended that GE should restructure to focus on industrial infrastructure and energy production  technology and sell off their low-margin consumer appliances operation. Today I read an article in the New York Times by Andrew Sorkin and Michael de la Merced entitled "G.E. May Sell Appliance Division" that tells us that "General Electric is planning to sell its appliance division." Good move, if I don't say so myself.

The amount of money they get from the sale of the appliance division pales in significance compared to the reduction in distractions to management.

Now, in addition to my previous recommendation that GE shed its its finance and entertainment businesses, I will add to that list that GE should also spin off its healthcare business. Sure, healthcare is a booming market, but it deserves a board and executives focused on healthcare, and GE simply does not need healthcare distracting it from industrial and energy infrastructure. GE should be focusing on needs such as powering, lighting, heating, and cooling medical facilities much more efficiently and reliably.

Now, let's see if GE continues to follow my advice.

FWIW, I am not a GE shareholder.

-- Jack Krupansky

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