Immelt to Wall Street’s Blackjack Dealers: “Hit Me!”
GE May Shed Storied Appliance Unit By DANA CIMILLUCA, CAROL HYMOWITZ, MATTHEW KARNITSCHNIG and RICK CAREW May 15, 2008; Page A1 General Electric Co. is preparing to sell or divest itself of its century-old appliances business, one of the best-known American consumer brands, as Chief Executive Jeffrey Immelt seeks to revive his weakened conglomerate.
GE could receive between $5 billion and $8 billion from a sale of the business, according to people familiar with the matter. A sale would come as the company faces pressure to trim a portfolio that ranges from credit cards to aircraft engines to television broadcasting, following a disappointing first-quarter earnings report. —The Wall Street Journal
“Gin rummy managerial behavior (discard your least promising business at each turn) is not our style.” —Warren E. Buffett, Berkshire Hathaway “Owner’s Manual”
“Hit me!” —Jeff Immelt, GE CEO, to Wall Street Investment Banking Blackjack Dealers
Not much more than a year after GE agreed to buy oil service company Vetco Gray from a private equity group for 3.5 times the PE group’s cost; and a bit less than a year after GE backed out of a head-scratching deal to buy two of Abbott Lab’s diagnostics businesses for what looked like 25-times trailing 12-month operating income; and one month after GE reported shockingly poor earnings from one of the few AAA credits left in this world, comes the announcement of further asset-shuffling at the American business icon: the sale of the GE appliance business.
Did Jack Welch—whose on-air rant (“Here’s the screw-up: you made a promise that you’d deliver this and you missed three weeks later…”) helped loosen the fast-shifting earth beneath his successor’s feet so quickly that Immelt is now described as “embattled”—leave so much of a mess behind him after twenty years’ worth of “delivering” on promises that nobody could stop the cracks from spreading under the whole foundation?
Or is Jeff Immelt really that bad a CEO?
If we had to bet, it’d be on the former, not the latter.
Jeff Matthews I Am Not Making This Up
© 2008 Not Making This Up LLC
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