A report from the Wall Street Journal stated that General Electric Company (NYSE:GE) is in the process of giving up its real estate business. It ought to be noted at this juncture that this real estate forms a significant segment of General Electric Company's (NYSE:GE) overall capital. This strategy is part of the long-term plan mapped out by the Chief Executive Officer of the company, Jeff Immelt. This plan brought forward by the CEO focuses on a shift of focus from the financial division of the company to its industrial division.
Presently, the company is indulged in finalizing some deal with Wells Fargo & Co and Blackstone Group LP. According to this deal, General Electric Company (NYSE:GE) would be selling off its real estate portfolio to the two companies, which is worth $ 26 billion. This deal would cover all the diverse investments made by the real estate division all across the globe, in office buildings, shopping malls and other commercially owned properties.
This deal is now quite near to its culmination and will probably be announced publicly within a couple of days.The financial results of fiscal year 2014 reflected a contribution of 13% made to the company's total revenue by its real estate segment. So undeniably, this division is indeed coming up with revenues, yet despite this fact, the company doesn't deem this segment to be part of its long-term strategy.Last month, another statement was put forward by the company in which it delineated its intention of giving up another business segment i.e. consumer lending and leasing business.
This latter segment also formed an important part of General Electric Company's (NYSE:GE) overall capital. Similarly, the previous year saw the company spinning off its appliances segment. This segment was sold off to Electrolux AB (ADR) for an amount of $ 3.3 billion. The company's strategy asserts that it would be only keeping those financial divisions which complement its industrial segment. All other segments would be sold off gradually.
These financial services which support its industrial segments include GE Capital Aviation Services, Commercial Lending and Leasing and Energy Financial Services.This change in the company's strategies was introduced after it had to go through a financial set back in 2008. This financial crisis was so dire that the stock price of General Electric Company (NYSE:GE) came down at $ 30.Up till now, the stock's price has been standing at a figure of $ 30.
Consequently, the shareholders have been pressurizing the CEO to do something about this situation. Thus, Mr. Immelt has come up with this long-term plan. This plan would go a long way in reducing the company's dependency on its financial segments. As a corollary, the risks ensuing from financial volatility would also be diminished.General Electric Company (NYSE:GE) is not only working on spinning off its financial segments. Rather it has equally enhanced its investments in industrial projects.
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