General Electric Company (GE) Leaves the Appliances Industry $3.3 billion Richer

General Electric Company (NYSE:GE) entered a new deal with Electrolux and sold its appliances unit for $3.3 billion, at about 10% higher that many analysts expected, according to an interview at CNBC with Christopher Glynn, Oppenheimer & Co., and David Nelson, Belpointe Asset Management. The amount is bigger than some poor countries’ nominal GDP, but it’s not enough to budge the price of General Electric Company (NYSE:GE)’s stock that remains slightly below $26 per share. It’s not such a counter-intuitive fact when considering the company’s $260 billion market capitalization.

Electrolux, the world’s second-largest appliance manufacturer by sales, is planning to take on Whirlpool Corporation (NYSE:WHR)’s dominant position in North America. It will also enjoy the iconic General Electric Company (NYSE:GE)’s brands and will surely benefit from the New York based giant’s century of experience in the industry.

“I think this is actually the last of the portfolio moves that GE has flagged for us and I don’t really see anything else substantial. Now, remember the Synchrony and Alstom deals, those are fairly substantial and those are mid-2015, maybe a little later, so those will kind of remake the pie chart of the different profit streams,” informed Christopher Glynn.

The interview further discussed the fact that Mr. Jeffrey R. Immelt was the General Electric Company (NYSE:GE)’s CEO starting with 2001 and during his rule the company hasn’t shown much progress in terms of stock price. However, inferring from the discussion, the correlation cannot be a direct one, considering major economic shocks that proceeded the date of September 7, 2001, when the company welcomed its then new CEO.

Christopher Glynn pointed also to the fact that General Electric Company (NYSE:GE) had a price-to-earnings of about 60 back then and it was a bubble stock during the power generation bubble. Then it had the bad inspiration of piling up 2006-2007  vintage commercial real estate close to the peak of the housing bubble and it increased exposure and vulnerability to the financial crisis. Nevertheless, the giant is slowly getting up on its feet and it might rise firmly as new opportunities are fortified and risks are hedged.

Disclosure: none