The company reflects Immelt's efforts to shed slow-growing businesses.
General Electric Co reduced its divisions to four from six, reflecting Chief Executive Officer Jeffrey Immelt’s efforts to shed slow-growing businesses as its stock trades near a five-year low.
The main divisions will now be GE Technology Infrastructure, GE Energy Infrastructure, GE Capital and NBC Universal, the Fairfield, Connecticut-based company said in a statement today. John Krenicki, who will lead the new energy unit, was promoted to vice-chairman, the statement said. He is 46.
The new structure emphasises Immelt’s priorities as he tries to shield GE from economic swings by divesting consumer units and exploit its role as the world’s biggest maker of power-plant turbines and jet engines. About $81 billion of GE’s market value has evaporated since April, when Immelt disclosed a surprise first-quarter loss he blamed on turmoil in financial markets.
“I appreciate the idea of breaking up infrastructure to highlight the technology aspect,” Robert Schenosky, a New York- based analyst with Jefferies & Co who rates the shares “hold” and doesn’t own any, said in an interview. “Where I do get concerned about the consolidation from six groups to four is the level of transparency we may get going forward.”
In particular, the formerly separate health-care group now folded into the technology infrastructure unit is one area where performance will be harder to track, he said.
Profit Target: GE was unchanged at $28.71 at 4 pm in New York Stock Exchange composite trading. The shares have declined 22 per cent since April 10, the day before Immelt told investors he would miss this year’s profit target of at least $2.42 a share. GE touched $25.60 on July 18, the lowest price since April 2003.
Immelt has sold slower-growing and capital-intensive businesses such as insurance and plastics for more than $55 billion and made more than $80 billion in acquisitions in health care, water treatment and power-generation equipment. Analysts including Jeffrey Sprague of Citigroup Inc have called for a simpler, easier-to-understand grouping.
“We can structure the company in a simpler way that can maximise future growth,” Immelt said in the statement. GE is “well-positioned to capitalise on some of the major growth themes of this era.”
Under the new grouping, the segment revenue of the two infrastructure businesses last year represented 47 per cent of the company, or $73 billion, spokesman Jeffrey DeMarrais said in an e-mail. GE Capital represents 38 per cent, or more than $66 billion. NBC Universal is about 10 per cent, or $15.4 billion.
