General Electric Unveils Massive Restructuring

GE will unload the bulk of its GE Capital business, valued at around $500 billion, over the next two years. It's the company's biggest strategic move under CEO Jeff Immelt in years.
5:06 | 04/10/15

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Transcript for General Electric Unveils Massive Restructuring
Okay. It's Friday April 10 and markets in New York RO but the make him this morning he's 500 billion dollars so. You know that's the thought Electric's financial RG capital and in the company's biggest strategic move in years GE will unload the bulk of that business. Which consists of lending and leasing operations. And a portfolio of real estate holdings across the glow of when I'm down Cutler in New York so GE CEO Jeff Immelt. To that the units that comprise GE capital we sold or spun off for the next couple of years and that starts with today's 226 and a half billion dollar sale of the real estate holdings. The sell it off the Wells Fargo and Blackstone Group what does that all mean why they making the moves. Rick went from Yahoo! finance on this this Friday morning so Rick any a fundamental restructuring of the company why are they doing this now. They're not doing it just now Dan this is this has been underway for a long time. A niece is that this is of the really about a twenty year story going back to the ninety's. Jack Welch was CEO of General Electric he built that into this conglomerate that had all these different business lines. Including. This huge finance unit which turned out to be one of the biggest banks in America. Mean a joke about achieve back then what does that it was a bank masquerading as an industrial company. That turned out not to be such a great idea that. That banking you editor of the finance unit it it foundered during the 20082009. Financial meltdown. Cause G all kinds of problems that actually threatened the viability of the company that union needed to get some bailouts from Washington. And what you effect Jeff Immelt the current CEO has been doing ever since that is trying to find a way to sort of wind down these. These parts of the company they are not really. Part of the core industrial operations so it's been going on since about 2000 Nader 2009. It just takes a really long time in two get rid of assets like this at a company as large as General Electric. Yet and you're talking about the reputation medic got that from regulators as well because they called it a systemically important financial institution. All because of this finance arm comics how important is that for the company to get rid of that kind of classification. It's really important that might sound like Washington Washington gobbling duke but. That designation is extremely important basically what it means is. General Electric's financial business not the rest of it but just the financial businesses is considered so big. And so connected to other parts of the the banking system. That it has to. Basically come underneath the strictest financial regulations in Washington these are the regulations that apply to banks such as Citigroup Bank of America. In other words if when the banks are so big that if one of them were to fail. It could potentially bring down. The entire rest of the financial system that means the have to be very strict regulations on the amount of risk those units can take. And that's obviously a real impediment to a company like General Electric. Which has decided it doesn't wanna be back anymore so late they're saying we wanna get rid of this unit so that we no longer have to deal with these it's relatively severe regulations. Given more freedom to operate and hopefully become more profitable. What about the manufacturing side of things in this whole equation because I mean is still existing here and that high end industrial space there and and he is it Smart them for GE to make this kind of move. Yeah well that's what. Jeff Immelt as saying you say well that's you know we decided that as our core business. This is basically what people think up when they Kankakee. Aircraft engines a power turbines they make a lot of medical equipment basically he's saying that's where we're going that's what the company's going to be. And you know this is a look this is important for shareholders meeting Immelt has. Really been bashed on Wall Street they have a really depressing stock chart if you look at their chart. The stock was way higher in the 1990s believe it or not it has gone it is sort of ticked upward a little bit during the last five years but is severely underperformed. The S&P 500 and you know the issues to be one of the crown jewels of corporate America I mean this is. You know one and one of those classic companies have been around for more than a hundred years that. In it was a widow and orphans stock you always wanted to hold stock in a company like this for the long haul in this really let down its shareholders said they need really need to do something. To get the company back in business saw house to house lost her reactive and recently been because of all this news. Wash it pretty happy on this the stock was up something like 7%. Pre in premarket trading today. So. You know there have been a lot of different things going I T try to trying to get it out of the right that expedient for almost a decade. And Cheryl and written shareholders have not been real psyched about my many of those things but this when they seem to light so. They like this investor they like GE going back to basics I think there's a lot that still it is involved in the execution this is complicated stuff. But Wall Street liked it so far all right strictly with Yahoo! finance Rick thanks so much every week I think than it is here. Keep up latest headlines were here at you know what's the big number I'm Dan Butler.

This transcript has been automatically generated and may not be 100% accurate.

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