“Today marks GE’s transformation to a more focused, simpler, and stronger industrial company,” said GE CEO Larry Culp, who just two years ago told investors the company had “no plans to sell GECAS.”
The effective end of GE Capital is the end of an important era for the former conglomerate.
The company has been trying to become leaner and more profitable in recent years, selling off its appliance business
in 2016, its NBC Universal
entertainment unit in 2011 and its light bulb business
in 2020, among other businesses.
Although those businesses had a higher public profile than GE Capital, no business was more important to the conglomerate during its heyday than GE’s finance arm. It provided financing on many of its industrial products, such as jet engines and electric power plants. And it was an important source of financing for small business and consumers. It even became a major player in the subprime mortgage business
But with the housing bubble bursting and the meltdown in financial markets that followed in 2008, no part of the GE business was hurt more than GE Capital, and what had once been a driver of the company’s success became an albatross. GE sold off most of the real estate and other assets from GE Capital
in 2015 and has been trying to exit its business step by step.
The company also warned investors it expects to make between 15 cents a share to 25 cents a share in earnings this year. That’s less than the consensus forecast of a 26-cent profit. Shares of GE (GE)
were down 5% in Wednesday morning trading on news of the deal and its new guidance.