Wednesday, May 28, 2008

GE Appliances

There has been a great deal of talk recently about GE selling its appliances division. Some observers seem to think that selling off this "low margin, low growth" business will help boost the company's stock price, which has languished for some time, and which took a hit when the firm missed its earnings target last quarter. However, I think that there are three big questions that must be answered before making a judgment on a potential appliance division sale. First, can we really expect the stock to make a substantial leap when the appliance division only accounts for $7 billion of the firm's $173 billion in annual revenue? Talk about a drop in the bucket. I do not think the sale of appliances is a panacea for the stock price. Second, how will GE deal with the brand name? A potential buyer clearly would want the GE brand name, which has such significance with the consumer. Allowing a buyer to license the brand name is risky. Third, and most importantly, what precisely are GE's criteria moving forward for what should and should not be part of the company's portfolio? Until GE answers that question clearly and concisely, I do not think investors will be completely pleased. It's not enough to say that the firm wants to be in higher growth, higher margin businesses, as some observers suggest that GE should be. That's not very limiting. Does any high growth, high margin business on earth fit at GE? Moreover, what about some of the other businesses within the portfolio, such as NBC? Broadcast networks clearly are not a high growth, promising business these days. Why does it stay and appliances have to leave? Clear answers to these questions must be provided for investors to feel comfortable with the GE strategy moving forward.

10 comments:

Darvin said...

Your blog is great. Talking about GE Appliances, huh? There is not much I could personally say about the company. But if you need a bite of bitter experience, then go to www.pissedconsumer.com, where you will find lots of bad feedbacks about the company. Talking about consumer electronics in general, I shoul say it is too hard to find something reliable and worthy, since today cheap fakes are numerous.

Gary said...
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Unacceptable said...
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sandi bessette said...
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WJB3 said...
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Carl said...
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Conni Barnett said...

I might as well add to all the discontent about GE appliances. I bought 3 appliances and two out of 3 are huge disappointments. I bought the refriegerator from Home
Depot after researching through Consumer Reports magazine. HomeDepot would do nothing but send me to the manufacuturer after going through the repair service man only to realize I had a real problem with the inside walls cracking that could not be repaired permanently. It would take glue, yes, glue to try to hold it together. I wrote the President of GE twice only to get a call from his assistant with the solution to buy another one from them for almost $1000. I paid Home Depot $1200 so I obviously did not appreciate the solution of buying more of a crappy product. I wanted a replacement which an honest manufacturer would do. Next thing that happened was with my GE microwave. The plastic just chipped away from the front of it. Just ask GE where the parts are made and it is quite entertaining to learn "they do not disclose that information." Since I am sitting in a room adjacent to the kitchen writing this and listening to the horrible noises coming from my GE refrigerator, I plan to place a youtube video on the internet and see how many times I can help others learn of the GE appliances and the lack of reliability GE offers customers. I plan to give the GE President's name and address.I remember seeing a youtube about a credit card customer and she got some results , so I think I will see what kind of response comes my way. Consumers of American need to stand up and demand quality products! ( By the way, my first refrigerator was a Sears product and it lasted 18 years. ) These GE products are about 3 years old. The problems started shortly after warranty which I am sure they are engineered to last through warranty. Conni Barnett

ApplianceSalesman said...

As an appliance salesman, I typically steer customers away from many GE products. I like the brand but they don't seem to have a great trackrecord. That being said though, I do really like their ranges. However, for something like a refrigerator, I really like Samsungs http://www.samsungrefrigeratorreviews.co

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