General Electric stock gained this week as the conglomerate announced its plans to sell interest in financial services sector and concentrate on manufacturing and the core sectors of the group. GE CEO Jeff Immelt had earlier indicated that the company management was planning to concentrate on few sectors and to improve margins in those segments.
General Electric plans to sell off its financial services and real estate operations. Before 2008 financial crisis, the financial services segment brought more than 50 percent profit for the company. The share of financial services in GE's profit will reduce to less than 10 percent by year 2018. CEO Immelt said that he see General Electric valued as a "premium industrial" company.
General Electric also announced massive buyback for the stock over the next few years. The company will also pay higher dividends to investors after the proceeds of the sale of financial services unit. GE Stock jumped nearly 10 percent after the announcement, the biggest move in the past few years. Shareholders will receive $ 50 billion in the share buyback program.
During an interview, CEO Immelt informed that the process of shedding finance assets has started more than five years back.
Regarding the move to sell finance assets, former General Electric CEO and Chairman Jack Welch said, "I like the package. It looks like a smart move and right for the changing financial landscape."
Market analysts have also rated GE's move to sell off finance assets as a step in the right direction. GE will sell its real estate portfolio for $ 26.5 billion to Blackstone Group and Wells Fargo.
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