General Electric Co. said Friday that it plans to sell or spin off its iconic appliance business that for a century sold refrigerators, air conditioners and ovens for millions of homes.
The industrial conglomerate said in a statement the move is part of an ongoing plan to exit “slower growth and more volatile businesses.”
GE’s 101-year-old appliance business, headquartered in Louisville, Ky., has been hurt by the housing slump and economic slowdown in the U.S. The appliance division had revenues of $7 billion last year and employs about 13,000 people worldwide.
“GE Appliances has a very strong brand ... and for more than 100 years has been one of the icons associated with GE in the United States,” GE Chairman and CEO Jeff Immelt said. “However, its remains primarily a U.S. business, meaning its fortunes are tied to the rise and fall of a single market.
The company is planning a strategic review that could result in an outright sale of GE Appliances, a strategic partnership or a spin-off to shareholders.
“This review is consistent with the strategy we have been executing to transform our portfolio for long-term growth,” Immelt said. “Since 2003 we have exited slower growth and more volatile businesses, generating $52 billion in gross proceeds from dispositions. These proceeds have been reinvested into a transformed portfolio of faster growth, higher margin businesses, stock buybacks and other restructuring activities.”
Last year, Fairfield-based GE shed its underperforming plastics business by selling it to a Saudi Arabian company for $11.6 billion.
The announcement comes two days after media reports first surfaced that GE was planning to auction off the appliance division.
“We think this is further recognition the company needs to exit the slow and no-growth businesses,” said Robert Schenosky, an industrial analyst with Jefferies & Co. in New York who has long favored such moves. “It’s a recognition that there is not anything that is untouchable at this point.”
Schenosky said it’s hard to predict what else GE might sell.
“Certainly other candidates could include the lighting business and even potentially NBC Universal,” Schenosky said.
Immelt has rejected calls to sell NBC, though he has been under pressure to restructure the industrial and financial conglomerate, particularly since last month’s surprising first-quarter earnings report that profit fell 6 percent.
GE could be a dramatically different company in the coming years, Schenosky said. He also said the company needs to look at the type of acquisitions it makes, saying deals in health care and entertainment made the company larger but did not boost earnings power in a meaningful way.
Analysts estimate sales in the appliance business are likely to decline between 10 percent and 12 percent this year. That stems from weak consumer spending and a drop in home improvement sales and residential construction.
Some have suggested a sale price in the low- to mid-$6 billion range.
GE's stock had its worst day in decades last month after the company reported a smaller-than-expected first-quarter profit and lowered its outlook for the full year.