July 23, 2019

GE Brings Good Things to an End – Exits the Appliance Business

Its all about gross margins. General Electric confirmed today that they are leaving the appliance business and will sell their appliance division to the highest bidder, as part of the “most active portfolio change in the history of the company.” GE, which entered the appliance business in 1907, is closing one of its signature divisions and strongest links to its past.

The industrial division that includes appliance manufacturing has stayed steady at around 17.7 billion dollars per year, a bit over 10 percent of the company’s 172 billion dollars in annual revenue. The company continues to produce well received, high quality innovative products.

But in the face of a 6 percent drop in profit, and heavy pressure from Wall Street, the suits in the executive suite at GE Corporate have spent the last year shedding almost 60 billion dollars in divisions that represent stability rather than growth. GE decided that appliances weren’t sexy enough anymore.

Chief Executive Jeff Immelt has been under pressure to restructure the industrial and financial conglomerate, particularly since last month’s surprising report that profit fell in the first quarter.At the time, Immelt brushed off questions about GE spinning off businesses. But with an 11 billion dollar sale of its plastics division, and a 5 to 8 billion dollar sale of its appliance division, GE is quickly liquidating those core industrial divisions that might face slower growth in today’s economic environment.

Don’t be surprised if the GE nameplate soon has mandarin subtitles.