Insightful analysis and commentary for the US and global equity investor
Contributors: Douglas McIntyre Jon C. Ogg

Previous Posts

Thursday, October 19, 2006

Neutron Jeff: GE CEO To Slash NBC Universal (GE)

Jeffrey Immeldt, GE's CEO, has never shown the appetite for cutting underperforming division the way his predecessor Jack Welsh did. All of that changed in the blink of an eye as GE division NBC Universal announced that it would cut its expenses $750 million.

Immeldt seems to have tired from the drag that the entertainment unit puts on GE's stock. Since announcing earnings, GE's stock has dropped from $36.30 to $35.5o. Most of GE's units did well, but NBC Universal did not. Segment profit at NBC Universal dropped 10% in the last quarter to $542 million, making it the only one of of GE's six reporting divisions to show a drop.

GE's press machine made it appear that Jeffrey Zucker, the entertainment units No. 2 executive, was the architect of the cuts. No one with any sense would believe that. Mr. Immedlt is chagrined by the fact that GE's stock has gone nowhere since he took over from Mr. Welsh.

NBC Universal is admitting that news is no longer an area of growth and most cuts will come in the news division. The company will also cut its budget for the 8 PM hour of broadcasting.

The company will put some money into its digital business, $150 million over the next two years. To compete with other online video ventures, that is a drop in the bucket.

The restructuring at NBC is not over.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

Powered by Blogger