With the announcement this week that General Electric Company (NYSE:GE) is selling its remaining 49-percent share of NBC Universal to Comcast Corporation (NASDAQ:CMCSA), the table may be set for GE CEO Jeff Immelt to follow through on his proposed goal of re-focusing the company on its more industrial roots – keyed by its dominance in production of jet engines and electric turbines.
“Around the portfolio, the focus is on getting the industrial earnings mix up to 60, 65, 70 percent (of total company profit) over time,” Immelt said. “We’re always going to look at ways to do that by growing our earnings and reducing GE Capital.” The company is expecting to return about $18 billion to investors this year in the wake of this sale, plus a continuing stock buyback program which is focused on the shares that were issued in late 2008 as the financial crisis nearly doomed the company.
General Electric Company (NYSE:GE) had owned NBC Universal since 1986, proclaiming that the purchase would diversify its operations. However, 25 years later, GE pulled the plug on its investment, selling 51 percent of its stake to Comcast Corporation (NASDAQ:CMCSA) in late 2011, stating that its business model that drove the company’s success in the industrial sector did not translate well into entertainment.
While General Electric Company (NYSE:GE) planned to buy back about $10 billion in shares during this year, there still may be about $15 billion available for any acquisitions, which the company has stated that it was open to “small” acquisitions, perhaps no more than $3 billion at a time. One analyst suggested that GE may use some of the NBC money to delve more into the mining industry, which some company executives have noted as an attractive option.
Do you think General Electric Company (NYSE:GE) is doing the right thing with this sale? Do you believe that GE will return to its industrial roots, or is this an opportunity for GE to invest somewhere else? We’d like your thoughts about this company in the comments section below.
DISCLOSURE: I own no positions in any stock mentioned.
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