Companies: A smaller GE attempts a reboot
General Electric’s “conglomerate era is long gone,” said Steve Lohr in The New York Times. CEO John Flannery, in the job since August, outlined a strategy this week that will ultimately render the corporate giant a “smaller company with fewer businesses.” Flannery plans to offload more than $20 billion in assets from GE’s sprawling portfolio; legacy businesses formed by founder Thomas Edison, including lightbulbs and locomotives, will be among those sold. “To help pay for the remaking of the company,” Flannery will slash quarterly shareholder dividends in half for only the second time since the Great Depression. The objective, he said, is to make GE “simpler and easier to operate.”
“So far, so good, for GE’s new leadership,” said Charley Grant in The Wall Street Journal. Flannery “sounded all the right notes” in renewing the focus on highermargin units, such as jet engines and medical-imaging equipment. Cutting the dividend will be “painful,” but it ensures GE can stay in the black. Flannery is also moving on from “embarrassing revelations of corporate excess,” such as a spare jet that followed the former CEO on business trips, by restructuring management pay. Flannery clearly grasps the need for cultural change. But reshaping GE’s portfolio and steadying its share price, which has plummeted this year, will be a task “far easier said than done.”
Regulation: Consumer protection chief resigns
Richard Cordray, the head of the Consumer Financial Protection Bureau, announced this week that he’s stepping down by the end of the month, said Renae Merle in The Washington Post, “clearing the way for President Trump to remake a watchdog agency loathed by Republicans and Wall Street.” The Obama appointee has run the agency, which was created by the Dodd-Frank financial reform bill, since 2012. His departure comes weeks after the CFPB “suffered a major rebuke from Republicans in Congress,” who blocked an agency rule that would have allowed consumers to sue their banks for the first time. Cordray is widely expected to run for governor in his home state of Ohio in 2018.
Toys: Hasbro bids for rival Mattel
Hasbro is attempting to acquire its “beleaguered” toy industry rival Mattel, said James Peltz in the Los Angeles Times. The merger would unite the country’s two largest toy makers and bring Hasbro’s Transformers, My Little Pony, and Nerf under the same corporate roof as Mattel’s Ken and Barbie, Hot Wheels, and Fisher-Price toys. While Hasbro’s market value currently sits at $11 billion, Mattel’s has plunged 47 percent this year to roughly $5 billion. The California-based company has struggled with “slumping sales,” which it attributes to currency fluctuations and the bankruptcy of Toys R Us.
Media: Disney to price streaming service below Netflix
Disney has unveiled details of the streaming service it plans to launch in 2019, said Sara Fischer in Axios.com. The entertainment giant plans to price the still-unnamed service “substantially below where Netflix is,” Disney CEO Bob Iger said last week. The company also confirmed that the service will be commercial free. Disney is developing a number of original TV shows for the service, including a live-action Star Wars series, an expansion of the High School Musical franchise, and a series based on the Pixar movie Monsters, Inc.
Mergers: Qualcomm rejects Broadcom’s $103B offer
Qualcomm this week rejected rival Broadcom’s bid to buy it, “setting the stage for one of the biggest-ever takeover battles,” said Supantha Mukherjee and Munsif Vengattil in Reuters.com. The $103 billion offer would have created the world’s third-largest chipmaker. Qualcomm said Broadcom’s bid “undervalued” it and does not account for the deal’s steep regulatory hurdles. Broadcom can now raise its offer price or launch a proxy fight by appealing directly to Qualcomm investors. “We have not eliminated those options,” said Broadcom CEO Hock Tan.