GE Going For Partial Break-Up (GE)

General Electric Co. (NYSE: GE) is announcing the spin off of lighting and appliances and is exploring alternatives for its consumer and industrial units.  This report originally came out on Bloomberg but CNBC (a GE subsidiary via NBC) has now confirmed reports.   A press release has also been issued right after the open.

As a reminder, the conglomerate posts earnings tomorrow morning.  The current bias is for another cautious report and this spin-off or reorganization right before the earnings announcement may very well be meant to smooth out any reaction.  Whether or not this will be enough to add significant value is still an outstanding unknown but it is at least a start.  Many on Wall Street want Jeff Immelt to break this conglomerate up, and now that choice might be more out of his control than before when the stock was closer to $40.00.

As we’ve noted, this isn’t going to look anything like your father’s GE of old.  The primary focus right now is on a spin-off to existing shareholders, although we’ll find out in short order whether or not that is the preferred venue or whether or not a sale end up being the exit.

GE shares are up about 1% at $27.50 right after the open.

Jon C. Ogg
July 10, 2008