Now comes yet another hard part: proving that its industrial portfolio can reliably grow.
“The future for GE is as an industrial company,” Chief Executive Jeff Immelt said this past Friday, announcing that the company will sell off virtually all of its GE Capital lending arm, retaining only those finance units that it uses to bolster its power generation, health-care and aviation businesses.
The divestitures over the next two years will mean giving up the sources of a third of the company’s profit. GE will lessen the blow to its per-share earnings by buying back $50 billion in stock, a move that will help reduce the conglomerate’s outstanding share count by 15% to 20% from 2014 through 2018.
Mr. Immelt also said the company will continue to look for $3 billion to $5 billion a year in acquisitions to bolster its industrial side.
The exit from finance is the boldest portfolio move in Mr. Immelt’s nearly 14 years at the top, a stark change that acknowledged there would be no way to break GE out of its prolonged share-price slump without letting go of financial services.
