It can take some companies many decades to grow large enough to merit a $28 billion market valuation. News that General Electric Co. (NYSE: GE) is transforming itself created that much shareholder value in just one day. What has the market so excited? GE announced that over the next two years it would sell off almost all of GE Capital’s portfolio for an estimated $90 billion. Longtime investors remember the sordid history of GE Capital. After more than 100 years of being an industrial and manufacturing powerhouse, the GE of the early 2000’s scarcely looked like the same company. Read More
It can take some companies many decades to grow large enough to merit a $28 billion market valuation. News that General Electric Co. (NYSE: GE) is transforming itself created that much shareholder value in just one day. What has the market so excited? GE announced that over the next two years it would sell off almost all of GE Capital’s portfolio for an estimated $90 billion. Longtime investors remember the sordid history of GE Capital. After more than 100 years of being an industrial and manufacturing powerhouse, the GE of the early 2000’s scarcely looked like the same company. The company had charged into real estate, commercial and personal lending. #-ad_banner-#And for a while, it looked like GE’s foray into finance was a rousing success. GE capital grew revenues 15% per year from 2003 to 2007 and the earnings from GE capital made up half of the parent company’s earnings in that final year before the crash. GE Capital’s aggressive financial practices came back to haunt it during the financial crisis. Its struggles strangled the parent company and necessitated a lifeline, which Warren Buffett and the U.S. government provided to stave off insolvency. But despite nearly bankrupting the company… Read More