Thursday, July 17, 2014

GE Puts Appliances On the Block

General Electric's CEO has long stated that one of his goals was to refocus the company away from financial services and more towards manufacturing value-added products for specialized industries. The next phase of that strategy was to change the mix towards industrial and away from consumer businesses.

Having followed the appliance business as a research analyst, I always felt it was a matter of time before the appliance business was pruned from the portfolio, and now the announcement has been made.

Just having returned from India, we noted that economic liberalization of decades ago has allowed appliances to permeate middle class households to an eye-popping degree.  The labels we saw in homes were Electrolux, Samsung, and LG, all of which should be interested in GE's business.

Domestically, GE has lost its way, and this will put a bit of a cap on the price as there will be some cleanup to be done by any buyer.  It is ceding entry level products, and trade-up brands to the Korean manufacturers. Even its experiment at the high end with Profile has lost ground.  With global markets so ebullient, this would seem like the opportune time to divest this business.

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