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GE Capital to Split in 4 in Surprise Shake-Up

July 27, 2002|From Times Wire Services

NEW YORK — General Electric Co. on Friday announced a surprise shake-up of its profit-driving financial services arm, splitting GE Capital into four separate parts in a bid to give investors a sharper picture of the unit's operations and results.

GE Capital, which generates 40% of GE's earnings, will be split into insurance, commercial finance, consumer finance and equipment units, each reporting to GE Chief Executive Jeffrey Immelt and Vice Chairman Dennis Dammerman.

GE Capital CEO Denis Nayden is leaving the position to form his own financial services advisory company. He will remain as a senior advisor to Immelt.

Immelt said that he has been considering the move since he took office.

GE, a wide-ranging conglomerate with a hand in everything from TV stations to insurance, has drawn criticism for its sometimes oblique earnings reports.

Analysts note that questions have been raised about how GE accounts for its pension and post-retirement costs, and Immelt has acknowledged the scrutiny, saying the company is working to provide greater clarity.

Michael Neal will be in charge of commercial finance, David Nissen will lead consumer finance, Arthur Harper will run equipment management and Michael Fraizer will be in charge of the insurance group.

The change is effective Aug. 1.

Both Nayden and Immelt declined interview requests, Bloomberg News said.

General Electric has maintained its AAA credit rating--the highest available--for 46 years, the longest of any company, according to debt rating company Standard & Poor's. S&P said Friday that the reorganization has no effect on the company's ratings.

GE shares rose $1.15 to $27.80 on the New York Stock Exchange.

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