General Electric Company (NASDAQ:GE) stocks rose this week after the company announced its plans to sell off its financial services and real estate operations. The company is set to focus on manufacturing jet engines, power-wind engines and others core sectors of the group.
General Electric’s financial segment brought more than 50 percent profit, before the 2008 financial crisis. The share of financial services will be lesser than 10 percent by 2018. The company has announced massive buyback of stock in the next few years. GE CEO Jeff Immelt stated that he valued General Electric as a “premium industrial” company.
“The stock is having an excellent day. It does not balance out a tough 10 years,” said Immelt.
Investors will receive higher dividends, after the company sells its financial services unit. Following the announcement, GE’s stock rose by 10 percent. Shareholders will gain $50 billion as a part of the buyback program. Immelt mentioned that the process of shedding financial assets began five years back.
In the coming years, GE will focus on increasing revenues from power-wind turbines and jet engines that will add 90 percent of earnings by 2018. Immelt withstood the opposition for purchasing companies at high costs, including purchase of oil and gas industry, during the time of sliding oil prices. General Electric CEO and Chairman Jack Welch stated that the package was a smart move and was right for changing the financial landscape.
Immelt faced a tough time in the past seven years in the midst of financial disturbance, and was looking for ways to boost the stock. Market analysts believe that selling financial assets of GE will help the company to lead in the right direction. The company’s real estate unit, worth $26.5 billion, will be sold to Blackstone Group and Wells Fargo.