ANALYSIS
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GE's Immelt Lacks Options
CEO needs to shrink, simplify the business, but can't
By Nick McMaster
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Posted Apr 3, 09 2:32 PM CDT
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(Newser)
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Don’t envy GE’s Jeffrey Immelt. Though his core business remains profitable, the CEO presides over a huge, unwieldy empire. Parts of the conglomerate, like GE Capital, have tanked the entire corporation’s share price and caused it to lose its prized AAA credit rating. Worse, Immelt may have to sell the finance arm or other businesses to shrink the firm, writes Jena McGregor for BusinessWeek.
Buyers are scant in the current economic climate—paradoxically, GE’s $48 million nest egg make it uncommonly equipped for acquisitions—and even the iconic appliance and lighting businesses failed to sell. Separating GE Capital seems the next logical step, except that the financing firm relies on GE proper’s cash and credit rating. It would need $32 billion in additional funds to stand on its own, not counting billions in renegotiated borrowing costs.