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GE should exit credit-card business: Citigroup
Dec. 12, 2007
SAN FRANCISCO (MarketWatch) -- General Electric Co., which is considering selling part of its credit-card portfolio to shift resources into faster-growing businesses, would do best to exit consumer-financial services altogether, Citigroup said Wednesday.
"A complete exit of consumer (GE Money) still is not planned, but would be constructive in our view," Citigroup analyst Jeffrey Sprague wrote to investors. "Problems in consumer finance could prove to be a distraction in 2008, undermining the attractiveness of GE's infrastructure exposure," he said. Sprague kept his buy rating on the stock.
In a far-ranging presentation on its outlook for 2008, the Fairfield, Conn.-based conglomerate (GE: 37.25, +0.22, +0.6%) said late Tuesday that it may sell or partner with other companies to combine costs for its private-label card program, which issues credit cards under the name of associations and retailers like Wal-Mart Stores Inc. (WMT:48.23, -0.80, -1.6%) and Lord & Taylor.
"I think we could partner or exit in private-label credit cards," Chief Executive Jeff Immelt commented in a conference call.
Faltering consumer-financial health and fewer securitizations will detract from financial-services earnings next year. General Electric said that the division's growth will likely slow to a 5% growth rate in 2008 from 20% this year. It expects GE Money, its consumer-finance arm, to post flat growth.
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