GE to eliminate small equipment leasing business?

Wall Street Journal (01/21/06) P. B16

ELTnews

With a $360 billion valuation, dismantling General Electric is not an option, but its portfolio could use some pruning. Unlike failed multinationals such as Cendant and Tyco International, GE's various businesses are all profitable and carry numerous benefits. The conglomerate's diversified earnings stream allows it to maintain its Triple-A credit rating, which reduces funding costs for its businesses, but especially financial services.

In addition, GE Capital grants GE's divisions access to financial products, such as vendor financing, that assist with sales. Breaking up GE might eliminate these benefits. Under CEO Jeff Immelt, GE has purchased approximately $110 billion of assets, more than three times the value of divestitures.

Analysts say Immelt should now consider eliminating businesses that do not enhance other parts of the portfolio, have lower capital returns or growth, and greater earnings volatility. Likely candidates might include GE's considerable equipment leasing business, chunks of its consumer appliances and lighting arms, and several residual insurance operations.

(There has been talk in the streets that GE Capital was going to get out of the small ticket leasing business. They like the large dollar transactions, and according to many GE manufacturers, have been moving these capital programs elsewhere. When the palaver gets to the level of the Wall Street Journal, perhaps there is more to it. editor)