| sky’s the limit: The General Electric Building at Rockefeller Plaza (AFP)
Hartford, Aug. 30 (AP): It’s clearly not Jack Welch’s General Electric Company any more.
A month after restructuring the company’s financial unit into four divisions, GE chairman Jeffrey Immelt announced yesterday that the company’s lighting and appliance businesses would be merged.
Immelt, who took over after Welch ended a lengthy career as GE’s chairman and retired last year, said the new GE consumer products division would “provide more cost-effective and pointed approaches to supporting all of our customers’ needs.”
“We want to create a simpler, more efficient business that will be competitive across all product lines,” he said.
Analysts agreed. “It looks to me like another bold move for Jeff Immelt. Makes sense,” said analyst Scott Davis of Morgan Stanley.
“Both businesses are selling to consumers, both businesses have below-average margins at the firm, and certainly there appears to be some synergies in putting the two businesses under one management structure,” he said.
Nicholas Heymann, an analyst with Prudential Securities, said the changes at Fairfield, Connecticut-based GE were “part of the evolutionary process” of trying to improve GE’s return on its portfolio. Company divisions without major growth prospects will have to make themselves profitable in other ways, like reducing sales and administrative costs.
“Light bulbs don’t lend themselves to a lot of post-sale profit opportunities,” he said. “Appliances, while certainly doing quite well now, are fairly limited other than opportunities to sell service contracts.”