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General Electric Co. (NYSE: GE), Gentleman's C CEO Jeff Immelt, is close to selling GE Plastics to Saudi Arabia's largest public company, the Saudi Basic Industries Corporation. You'll remember Saudi Arabia as the supplier of 15 of the 19 9/11 mass murderers.
But Immelt is going to collect $11 billion and dump an under- performing unit where both he and his predecessor Jack Welch worked. Competition and price increases in raw materials have squeezed profit margins, even though GE Plastics increased product prices. For 2006, the division reported $6.6 billion in revenue -- about the same as in 2005 and its profit fell 22% to $674 million.
The deal raises national security concerns but investors seem to like it a little -- GE is up 1% in early trading.
Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.
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Reader Comments (Page 1 of 1)
5-18-2007 @ 11:55AM
Holben in Denver said...
So, another foreign company (this one, too, in a country (Saudi Arabia) run by what are really dictators)is buying an American company. Why do these foreign company's and countries spare no effort to criticize, demean, and even destroy America and its economic and political system then turn around and buy the fruits of our way of life...and we let them?!
5-21-2007 @ 6:47PM
John Zelfi said...
Bigoted remarks from the professor. The 9/11 commission has exonerated Saudi Arabia from any wrong doing and Saudi Arabia has been loyal American ally supplying the US with cheap oil for the last 35 years. Even with its all time high price and taking into account that oil is a finite resource a barrel of oil today at $65 is cheaper than a barrel of Coke. Has the professor forgotten that American economists were the advocates of free markets and globalization in the last century. Sabic is not looking to restructure GE plastics and implement massive lay-offs like other bidders and will save many American jobs. Cross border transactions will only increase in a globalized world and boy for isolationist bigots its going to be a long decade coming.