I think GE is making a mistake by trying to grow faster by selling their cash flow units. We are headed in an environment where the basic necessities will only get more expensive and probably the growth will stay stagnant, so the dividend paying stocks will retain their value. I don't know I am not managing such a business, but it appears to me they are trying to leverage themselves up in an environment that's deleveraging, I think the cash flow with the high assets will become much more significant criteria for value until the market bottoms and this is years away. There is nothing wrong in admitting that the environment has changed and the company will remain defensive and focus on cash flow rather than growth, of course either way they might go bankrupt because of their excessive debt and any leveraged paper they are holding in their financing units...
According to the news, they are also selling their appliance business, it has to do with the housing glut out there, probably the sales are way down... They are only focusing on the big ticket items. Apparently this is a marginal product line too...
It's the most recent in a series of moves by GE to reshape its portfolio to focus on faster growth businesses. GE announced Thursday that it wants to spin off its lighting and appliance businesses, which are part of GE's industrial products business.
Edited by arbman, 11 July 2008 - 12:11 PM.
