Should G.E. Spin Off Its Financing Arm?

Should G.E. Spin Off Its Financing Arm?
September 23, 2008, 7:55 am

As The New York Times noted Monday, General Electric is as much a bank as a blue-chip industrial company and that dichotomy last week landed smack in the middle of the market turmoil surrounding financial companies.

Half of G.E.’s profits come from GE Capital and in last week’s crisis, G.E. found itself treated by fearful investors as another financial company potentially in peril, until news of a planned federal bailout brought a rebound in the markets late Thursday and Friday.

The way Breakingviews sees it, GE Capital is holding the rest of the group’s top-notch businesses hostage, Breakingviews argues. That doesn’t just hurt the stock’s value, says the publication — GE Capital’s financing needs could put the whole company at risk.

One solution to keeping its other businesses untainted by future problems with its financing arm, Breakingviews argues, would be to spin off GE Capital to shareholders, perhaps even as a bank holding company — the corporate structure Goldman Sachs and Morgan Stanley are now embracing.

The publication admits this would be a complicated move. But, Breakingviews argues, if there’s a lesson to be drawn from the travails at Lehman Brothers, Bear Stearns, the American International Group and elsewhere, it is that corporate executives and the boards that oversee them should be a little more imaginative in their planning meetings.

General Electric Wins $100 Million Order for Gas Transmission Project in China,

Press Release
Source: Industrial Info Resources

General Electric Wins $100 Million Order for Gas Transmission Project in China,
an Industrial Info News Alert
Monday September 22, 6:30 am ET

BEIJING--(MARKET WIRE)--Sep 22, 2008 -- Researched by Industrial Info Resources (Sugar Land, Texas) -- GE Oil and Gas (Florence, Italy), a division of General Electric Company (GE - News) (Fairfield, Connecticut), has won a bid to supply pipeline compression equipment to China's west-to-east gas-transmission project. The total value of this contract exceeds $100 million. GE Oil and Gas will provide seven compressor units driven

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GE says it's 'not Lehman,' but stock still takes hitsPublished

GE says it's 'not Lehman,' but stock still takes hits
Published: September 19. 2008 12:01AM
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VideoAd by Mixpo The anxiety over the U.S. financial system has spread far beyond Wall Street to infect any company that's involved in loans, finance and credit, even dragging down the value of huge conglomerate General Electric Co.Its shares have been battered over the past few days, even though slightly more than half of GE's business is making light bulbs, jet engines, locomotives, water treatment plants and other major manufacturing goods."It's trading as a financial stock this year," said analyst Matt Collins at Edward Jones in St. Louis. "Right now, the credit crisis has gone well beyond just the Wall Street institutions."GE Capital is the conglomerate's financial business that provides consumer finance in car loans, mortgages outside the United States, credit cards and other products. Its commercial side finances real estate, corporate lending and leasing.

And GE also finances energy projects and airline leasing.In the last 10 days, the share price has tumbled nearly 20 percent as Wall Street grapples with chaos in the financial markets. Since April, when GE widely missed its first-quarter earnings target, almost $83 billion in GE's market capitalization has been wiped out, a loss of 25 percent."No one is immune in this market and no one has been spared and they certainly are in that basket," said Eric Boyce, portfolio manager at Hester Capital Management in Texas.However, GE originates its own loans, avoiding the loan packaging and selling that have sunk many other lenders, he said.GE spokesman Russell Wilkerson emphasized what the company is not."We're not AIG. We're not Lehman. It's not our business model. We're not a bank," he said.-- wire report