Why GE Is Dropping Appliances

General Electric (NYSE: GE  ) CEO Jeff Immelt keeps telling us that the megaconglomerate is looking to refine its business model. If you didn't believe him before, maybe he'll get your attention by selling off GE's century-old consumer appliance division.

That operation, started in 1907, is currently the leading supplier of appliances in new housing construction. But in the current real estate downturn, that's not good enough, and Whirlpool (NYSE: WHR  ) takes the catbird seat if you include aftermarket sales, too. Combined, GE and Whirlpool accounted for 46% of all American kitchen appliance sales last year; a combination of the two would raise serious antitrust issues.

GE is looking for as much as $8 billion in an auction run by Goldman Sachs (NYSE: GS  ) , which removes a lot of small fries from the pool of hopeful buyers. The Wall Street Journal reports that German and Chinese giants of heavy industry could step in and land an instant upgrade to their American ambitions. I'd add Dutch consumer heavy Philips (NYSE: PHG  ) to the Journal's short list of candidates, and that's about it.

There really aren't any credible domestic bidders, aside from hedge funds and other pure investment firms, and I'd be surprised if the unit were sold off piecemeal. In short, we're looking at a real possibility of moving this American institution abroad.

Now, GE is sitting on a $15.3 billion cash hoard, so what difference will a few billion more make? I don't see this as a major growth move for GE, but it is a strong statement of the company's willingness to make drastic decisions as it navigates the swirls and eddies of business. That strong stance is worthy of Foolish respect all by itself.

Further Foolishness:

Fool contributor Anders Bylund holds no position in any of the companies discussed here. You can check out Anders' holdings if you like. Foolish disclosure never goes into the spin cycle.


Read/Post Comments (0) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 646947, ~/Articles/ArticleHandler.aspx, 12/20/2014 7:18:39 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement