I only wish I could shrink as fast as General Electric
The company ended the week by announcing that it plans to spin off its entire consumer and industrial businesses. That'll get it out of the slow-moving appliance, lighting, motors, and electrical businesses just as soon as the units can be rolled into a separate company and spun off to GE shareholders. That'll probably take place next year.
Also on the way out is its consumer finance business in Japan, which GE said Friday it'll sell to Shinsei Bank for $5.4 billion. Those moves will follow the shedding of the company's flimsy plastics business, which was sold last year to a Saudi Arabian company for $11.6 billion.
GE management obviously hopes that paring those units in favor of concentrating on its faster-growing businesses will boost the company's growth. After a disappointing first quarter and a lackluster second quarter -- which was positive only in that it met expectations -- some punch in the company would be welcomed.
The company's second-quarter results slipped 5.8% from a year ago, with net income coming in at $5.07 billion, or $0.51 per share, compared with $5.4 billion, or $0.52 a share, in the second quarter of 2007. This year's numbers include $400 million for restructuring and other charges. Continuing operations yielded $0.54 a share, comparable to last year. The infrastructure business clearly was the star of the show, chalking up a 24% growth in earnings, with the energy, oil and gas, transportation, and aviation units leading the way.
So GE follows Alcoa
In the meantime, I'd suggest that Fools let the proof of the pudding be in the results, and resist positions in GE until its restructuring is closer to completion.
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