This Day On The Street
Continue to site right-arrow
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
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

General Electric Unplugging Appliance Unit to Spark More Profits

Stocks in this article: GE ALSMY SI ELUXY

NEW YORK (TheStreet) – General Electric's (GE) CEO Jeff Immelt has promised to get the company back to its industrial roots. So it comes as no shock that company announced plans to sell its GE Appliance unit, one of its poorest-performing segments.

Shares of GE were trading at around $26, dow 7.6% on the year to date, trailing the 0.47% gain posted by the Dow Jones Industrial Average.

The stock's underperformance is only part of a story, however. GE has just begun a new chapter with its recent deal for Alstom (ALSMY).

Read More: Warren Buffett’s Top 10 Dividend Stocks

GE's appliance unit has a suitor, drawing interest from Quirky Inc. and Sweden-based Electrolux AB (ELUXY). The questions is how much GE can fetch for its century-old businessh.

Calls and emails to GE representatives were not immediately returned.

The appliance unit wasn't picking up its weight. Revenue continues stagnate. This business accounts for almost 6% of the company's total revenue, but generates roughly 1.6% of total profit. Not to mention, with less than 4% in operating margin, GE was wasting money just by "keeping the lights on." Cutting its losses seems like a logical move.

Nonetheless, it is estimated that GE could generate in the area of $2 billion. It's not game-changing deal for GE, which is generating almost $30 billion in operating cash flow. Still, that's pretty good coin for a business that's producing no growth while delivering poor margins.

The way I see it, GE is positioning itself for the next 10 years of growth. So at around $25 per share, the stock is a sure bet to reach $35 in the next 12 to 18 months. Note, GE would only need to grow its revenue at a long-term rate of 4% to 5%.

Read More: 10 Stocks Carl Icahn Loves in 2014

What's more, with Alstom now firmly in hand, selling the appliance unit will help GE regain the focus it needs to grow its international presence against German rival Siemens AG (SI). This is because GE now owns all of Alstom’s global gas and steam turbine equipment and services business.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

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
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

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
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, 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
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

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

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
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!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

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