GE appliance moves from frying pan to fire
GE (GE) cannot sell its appliance and light bulb operations, so it will increase its investments in the businesses. It is an odd course to take when the recession is still biting and investors want to see an improvement in GE's margins, particularly in its weakest operations.
According toThe Wall Street Journal, "GE is among many companies the recession has saddled with businesses they would rather exit." The paper reports that the conglomerate added 400 workers at a large plant recently.GE has another option: cut capital expenditures and costs, including employees, to the bone. It could simply milk its appliance operations and run them for maximum cash yield. That would make the businesses less attractive for a buyer, but since a buyer can't be found it may be a long time before the company can dump the division anyway.
Milking businesses for cash while running them into the ground is an old American tradition. There is no reason for GE to put any capital into its flagging operations. It should take out money and make shareholders happy.
Douglas A. McIntyre is an editor at 24/7 Wall St.