GE (GE) continues to try to revive its mediocre stock price by using acquisition to bulk up divisions that already have strong results. The big conglomerate is close to buying the diagnostics business of Abbott (ABT). The business has revenue of just under $ 4 billion. GE’s healthcare operations have revenue of about $17 billion.
The Abbott division does have relatively small operating margins. In the first nine months of 2006, the unit was 18% of the Abbott topline but only 7% of operating profits.
The financials of the unit have to make Wall St. wonder if GE is trying a bit to hard to build businesses that might be viewed as a better use of its management time than divisions like NBC Universal.
If so, GE’s stock price may not continue its recent rise.
Douglas A. McIntyre can be reached at [email protected]. He does not own securities in companies that he writes about.
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