Watch Reuters Editor at Large Chrystia Freeland’s interview with General Electric CEO Jeffrey Immelt. Immelt met Chinese President Hu Jintao today and GE is reporting quarterly results this Friday. What’s Immelt’s vision for the manufacturing giant? See the discussion below.
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As GE officials have talked up their post-NBC M&A strategy over the past few weeks, they keep coming back to the one that got away — French nuclear reactor maker Areva’s transmission and distribution business. Areva in November decided not to accept bids from U.S. conglomerate General Electric Co or Japanese industrial Toshiba in favor of a bid from a French consortium, in a move that many saw as politically influenced.
Speaking in New Delhi, General Electric CEO Jeffrey Immelt said “Discussions are ongoing whether it is an IPO or another partnership,” in response to a question on whether GE was talking to Comcast to sell a stake in the fourth-placed TV network and movie studio. With Vivendi possibly just a couple weeks away from unloading its 20 percent stake in the NBC venture, and all the talk this week about Comcast gathering coins to add the content trove to its cable mix, it might seem as if Immelt is trying to conjure something like a rabbit from a hat – or a peacock from a beret.
General Electric Co Chief Executive Jeff Immelt went to Michigan, the bleeding heart of the U.S. industrial heartland, on Friday to call for a resurgence in American manufacturing.
But even as he warned against relying too heavily on the financial industry to drive economic growth, he subtly set up a defense of the largest U.S. conglomerate’s hefty finance arm.
How big is the $700 billion financial bailout package for the markets? Big enough that a change in perception as to whether it will pass can overshadow a cut in outlook from industrial and financial powerhouse General Electric.
Initially down after GE slashed its quarterly and full-year forecast, Dow Jones futures turned higher in later pre-market trade on optimism that the bailout will go ahead with only minimal friction in Congress. GE CEO Jeffrey Immelt said persistent woes in its finance arms, which account for half of its business, were to blame for the dimmed outlook.
GE stunned Wall Street in April with an unexpected drop in first-quarter profit. It blamed the global credit crunch and the collapse of Bear Stearns for pushing its finance arms lower. These are the businesses at the root of the outlook problems now. At least the market is getting some warning this time — in the spring, GE sprung the bad news on investors in its results statement.
GE shares were down early, sagging to $23.50, off more than $1 from Wednesday’s close. If they hit $20.25 they will have lost half of their value since Immelt became CEO.
Given the size and breadth of its financial biz, it would be no surprise to see GE in line for some bailout money. But the company seems to be saying it is fully capable of managing its own problems for now. If the market starts to sense, though, that the profitable parts of GE, the industrial stuff, will be the next shoe to drop in the economic slowdown…look out.