GE appliance sale would make sense, analysts say

GE is not commenting on news reports that it plans to auction off its Louisville, Ky.-based business that makes refrigerators, air conditioners and ovens. The possible sale was reported Wednesday by The Wall Street Journal.

Analyst Nicholas Heymann of Sterne Agee said in an investor note that such a deal should not be a surprise. Sales in the appliance business, which posted revenue of $7 billion last year, are likely to decline between 10 percent and 12 percent this year due to weak consumer spending and a drop in home improvement sales and residential construction.

"It's not going to bounce back tomorrow," he said in an interview. "A $600 rebate check is not going to buy a $5,000 appliance."

Matt Collins, an analyst at Edward Jones in St. Louis, said selling the business makes sense even if it would be too late. The sharp drop in the housing market now makes an appliance manufacturer less attractive.

"It's a move in the right direction," he said. "The best time to sell it was two years ago. Unfortunately, it didn't happen then."

Collins said GE, which entered the appliance business in 1907, did not invest heavily in the appliance business.

"It's a low-margin low-growth company being attacked by foreign competition," he said.

GE's appliance business is also probably hurting because a portion of its business is based on consumer credit, which is being squeezed hard, said Peter Sorrentino, senior portfolio manager at Huntington Asset Advisors in Cincinnati.

And GE officials must ask themselves if a selling price of up to $8 billion is meaningful, he said.