This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

GE Unit Looks to Swap "Draconian" Cost Cuts for Green Growth

Stocks in this article: GE PHG RRI WHR

NEW YORK ( TheStreet) -- General Electric (GE - Get Report) grew earnings in its appliances and lighting unit largely through layoffs and discretionary spending cuts last year, but now it's looking to energy-saving initiatives to spur growth.

GE
James Campbell, GE Lighting and Appliance chief

"A lot of it was tough cost actions," says James Campbell, the unit's President and CEO, in an interview with TheStreet. "We had to make some draconian kinds of moves around head count, T&E travel and entertainment spending -- a lot of the traditional things a lot of other companies did. We were able to get some deflation in the marketplace and leverage that, and you know quite honestly it was a lot of blocking and tackling because our top line was down."

The appliances and lighting unit grew earnings by 10% last year, delivering $400 million in operating profits to the parent. General Electric is slated to report its first-quarter results before the opening bell on Friday.

>>>General Electric: Earnings Preview

A big chunk of the unit's layoffs came in Hungary, where GE produces incandescent light bulbs. Many governments, including the United States and the European Union, are prohibiting the use of those bulbs in favor of more energy-efficient products. GE lighting announced last year it would cut 2,570 jobs in Hungary.

Once the core of GE's business, the appliance and lighting unit, which is headquartered in Louisville, Ky. and employs 27,000 people, gets little attention these days. Until last year, the businesses were part of a GE division called Consumer & Industrial, which accounted for 6.2% of revenues in 2009. That division also included an electrical distribution business, however. GE does not disclose the size of these individual businesses.

GE tried to sell its appliance unit in 2008, but pulled it off the market when the credit crisis drove away potential buyers. Three investment bankers I spoke to all said they thought there was a decent chance GE would look to sell both appliances and lighting in the future, though they had no knowledge that GE was actively contemplating such a move. Two of the bankers were fairly negative on the businesses, while the other (who follows GE more closely than the others) argued that they are simply too small to matter to the brain trust at the company's Fairfield, Conn. headquarters.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Jim Cramer and Stephanie Link reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

Jim Cramer's protégé, David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
Try it NOW
Try it NOW
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

Jim Cramer's protégé, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!

Markets

DOW 17,164.95 -251.90 -1.45%
S&P 500 1,994.99 -26.26 -1.30%
NASDAQ 4,635.24 -48.1670 -1.03%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs