(Updated throughout with company and analyst comments, background and stock price.)
By Bob Sechler Of DOW JONES NEWSWIRES General Electric Co. (GE) announced Tuesday that it is reorganizing its big finance arm, GE Capital, in a move that will save $2 billion in 2009 and create "a more focused set of higher return businesses."
The company said the reorganization will result in an unspecified number of layoffs as GE Capital sheds some low-performing assets.
The new structure, effective Jan. 1, will have regional centers in Europe, Asia and the Americas, the company said. Under the plan, GE Capital also will operate a new platform for consumer-focused international banks and joint ventures, as well as a "restructuring group" to focus on "optimizing returns on non-strategic assets."
Bill Cary, who is assuming the post of chief operating officer at GE Capital, said in a video posted to the company's Web site that the restructuring group will identify "some of the assets that we believe are lower returning...and that we ultimately want to get small in over time."
Cary had been heading GE Capital's consumer-finance group, known as GE Money.
GE, based in Fairfield, Conn., said in September that it planned to shrink GE Capital, which last year accounted for 45% of the conglomerate's profit. At the time, GE said it would pare borrowing at the unit for the remainder of 2008, with an aim for it to provide 40% of earnings by the end of 2009.
GE shares have plunged by 57% this year, largely based on concerns about the company's heavy exposure to the financial-services sector. The stock closed up slightly Tuesday at $16.06 a share.
Analysts' initial reaction to the restructuring plan for GE Capital was positive.
"If they can find extra savings in this environment, fantastic," said Edward Jones analyst Matt Collins.
"Any change that improves transparency is welcome," he added.
GE said the restructuring builds on its recent actions to improve liquidity.
"Over the last two months, we have acted decisively to improve our funding position," GE Capital Chairman Michael A. Neal said in a prepared statement. "We reduced our leverage, successfully raised capital, and accessed government programs that level the competitive playing field for us in financial services."
GE has taken a number of dramatic moves in recent months to shore up investor confidence. Among them, GE raised $15 billion, including $12 billion through a common-stock sale and $3 billion through an investment from Warren Buffett's Berkshire Hathaway Inc. (BRKA, BRKB).
In addition, GE announced last week that GE Capital would participate in a new federal debt-guarantee program. The company also has accessed a new short-term funding facility created by the Federal Reserve.
Under GE Capital's new structure, Dan Henson will oversee the Americas region, John Flannery will oversee Asia and Richard Laxer will oversee Europe, the Middle East and Africa. Mark Begor is overseeing the restructuring group, and Dmitri Stockton is overseeing the banks and joint-ventures unit.
-By Bob Sechler, Dow Jones Newswires; 512-394-0285; bob.sechler@dowjones.com
(Jay Miller contributed to this report.)
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(END) Dow Jones Newswires
November 18, 2008 17:01 ET (22:01 GMT)

Publié le 18 novembre 2008 Copyright © 2008 Dowjones