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Crunching Numbers – GE Applicances

While I wasn’t overly impressed with the recent quarterly miss by General Electric, I was surprised after work today to read that the WSJ is reporting that GE may be considering selling their appliance division in an auction for $6.0-8.0B ($US). While it’s not a surprise that GE might be shedding non-essential assets in an attempt to improve profitability, my interest peaked in reference to WHO might be a potential buyer of those assets.

WHR may be interested in adding the appliance division to their existing operations under the Whirlpool or Maytag brand names and the acquisition would make an excellent fit with their long-term growth strategy.

At the momet I’m running some numbers to get a sense of how the company, in the event they participate, might finance such a purchase and how that affects their financial position. At first glance I feel strongly that this fits the WHR business model and would secure substantially more market share over the long-term if the assets are purchased at some fair market value.

Disclosure: I own shares in both WHR & GE.

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{ 3 comments… add one }
  • MG (moneygardener) May 14, 2008, 10:25 pm

    I like this move by GE. Perhaps bad timing on the sale with housing busted but I’d like GE to focus more on infrastructure and other growth areas. Now, I wonder if they’ll sell of NBC Universal.

  • Nurse B, 911 May 15, 2008, 6:56 am

    MG,

    I’d have to agree that a more intensive focus on growth divisions is something that a company the size of GE should pursue. If they’re considering the sale of their appliance division, I would guess that they’ve looked at others including NBC. I doubt healthcare, energy or aerospace would be up for sale (due to high margins), but if advertising revenues from the NBC division stagnate and costs rise then we might see that sale with the consolidation we’ve seen recently in media names.

  • MG (moneygardener) May 15, 2008, 2:41 pm

    If they ever sold NBC U the stock would rise significantly IMO.

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