* Will pay $3.2 billion in cash taxes on deal
* Continues campaign to refocus on industrial base
* GE shares up 3 percent to highest level since 2008
By Scott Malone
Feb 13 General Electric Co expects to
return about $18 billion to investors this year as it sells its
remaining stake in NBC Universal, a move that executives said
should allow it to achieve its long-held goal of buying back the
shares it issued in the depths of the financial crisis.
The sale, which came more than a year earlier than expected,
is the latest step in Chief Executive Jeff Immelt's campaign to
refocus the largest U.S. conglomerate back on its industrial
The news sent shares of the world's biggest maker of
electric turbines and jet engines up 3 percent, to their highest
point since October 2008, when the financial crisis was
threatening to undermine the company.
In a Wednesday morning conference call with analysts and
investors, Immelt emphasized that he would stick with the
company's current capital allocation plan, which calls for
buying back shares, raising its dividend and pursuing small
acquisitions typically no larger than $3 billion.
That is change from what GE did in 2010 and 2011 with the
first half of its money from selling NBC Universal to Comcast
Corp, when it embarked on a $12 billion wave of
takeovers to boost its presence in the energy sector.
"This allows GE to focus completely on the industrial
business," said Zahid Siddique, associate portfolio manager at
the Gabelli Equity Trust, a GE shareholder, though he added that
he would not be surprised if the Fairfield, Connecticut-based
company eventually used some of the NBC proceeds to expand its
presence in the mining sector, an industry that GE officials
have called attractive.
Bernstein Research analyst Steven Winoker noted that even
with GE's plan to buy back $10 billion of shares this year, it
could end up with as much as $15 billion to put towards
This year's buyback should reduce the company's share count
below 10 billion, said Chief Financial Officer Keith Sherin. GE
currently has 10.49 billion shares outstanding, according to
GE said it would pay $3.2 billion in cash taxes on the deal
OVERCOMING THE HANGOVER
Wednesday's rise in GE shares, up 77 cents to $23.35 on the
New York Stock Exchange, helped erase a dramatic slide during
the financial crisis, when its shares briefly fell below $6 amid
fears that a shaky GE Capital could bring down the entire
Prior to selling NBC, GE had focused much of its efforts in
recent years on scaling back its financial arm, making it less
dependent on short-term funding and focusing more closely on a
handful of operations, such as financing the sale of industrial
equipment and lending money to mid-sized businesses.
GE could yet sell or further scale back its mortgage
business and commercial real estate holdings as it continues to
scale back GE Capital, which it wants to generate no more than
30 to 40 percent of its profit, executives said.
"Around the portfolio, the focus is on getting the
industrial earnings mix up to 60, 65, 70 percent (of total
company profit) over time," Immelt said. "We're always going to
look at ways to do that by growing our earnings and reducing GE
END OF AN ERA
GE acquired NBC in 1986, a deal that gave it its iconic New
York building at 30 Rockefeller Center, and for years company
officials argued that the growing entertainment empire, which
later expanded to include Universal studios, was an important
part of its diversification strategy.
But GE gave up on that approach, selling 51 percent of NBC
Universal to Comcast in early 2011, after concluding that the
industrial disciplines that made the company the world's largest
maker of jet engines and electric turbines did not apply to
Indeed, the popular "30 Rock" television program on NBC
routinely made fun of the idea, starting when the character
played by Alec Baldwin was transferred from a fictional
microwave division to run NBC.
The show continued to track GE's corporate history,
eventually having the network sold to "Kabletown."
GE executives clearly relished the glamour of owning a
television studio, for instance holding annual December investor
meetings at the studio where "Saturday Night Live" is produced.