GE exiting GE Capital, and Apple’s Watch delay — 5 things to know today
Hello friends and Fortune readers.
General Electric (GE) made big news Friday morning when it said it plans to get rid of most of its GE Capital, its profitable but risky giant finance unit, and focus instead on its core industrial operations. GE Capital’s Chairman and CEO Keith Sherin said last year’s initial public offering of the company’s retail finance business, Synchrony Financial (SYF), and other business deals have proven the company’s financial service assets “can be more valuable to others.”
In the tech world, Apple (AAPL) began taking pre-orders for its highly anticipated Watch. Although prior launches of Apple’s latest gadgets often evoke images of long lines at the tech behemoth’s retail stores, things will look different for the Apple Watch, as orders are being recorded online.
Here’s what else you need to know to start your day.
1. GE decides to exit banking.
The big takeaway from GE’s plan to sell real estate assets to Blackstone is the company is moving away from financial services and instead honing in on becoming an almost pure-play industrial firm. GE expects that by 2018, more than 90% of earnings will be generated by its “high-return industrial businesses.” That’s up from 58% last year. While GE Capital was important to the history of the company, GE said the business model for large, financial companies has changed, “making it increasingly difficult to generate acceptable returns going forward.” The transformational changes are also coming with a steep charge: GE said it would book a roughly $16 billion after-tax charge in the first quarter of 2015.
2. Apple Watch shipments could be delayed.
Apple is generating a lot of friendly press on Friday as the company began accepting advance orders for the company’s first new product in five years — a wrist-worn smart device that is designed to display notifications and run apps from the iPhone. Much of the press honed in on an April 24 release date, but media reports are indicating that supplies for that launch day have already run out. The company’s website is now indicating it could take several months before models ship out to consumers. CNET says “the summer,” while Business Insider floated word orders could be shipped as far back as August.
3. Cuba may be off the terror list.
The U.S. State Department recommended President Barack Obama remove Cuba from the U.S. list of state sponsors of terrorism. Obama, who was briefly visiting Jamaica, said that while the State Department had completed its review, he would wait for a recommendation from his advisors before announcing a decision. Removing Cuba from that list would be needed to help restore relations between Washington and Havana, which have been moving toward reopening embassies that have been shut for 54 years.
4. A “mother of the Internet” scores a huge deal
LinkedIn’s (LNKD) decision on Thursday to pay $1.5 billion in cash and stock to buy Lynda.com put the spotlight on 60-year-old Lynda Weinman, who co-founded the company with her husband Bruce Heavin in 1995. The Wall Street Journal wrote a profile on Weinman, calling her a “mother of the Internet” and pointing to her success as an author of some of the earliest books on Web design. She was the first to categorize the 16 colors used in Web design — a key advance when many websites were hand-coded in HTML. Also interesting: “few, if any, of her associates have negative things to say about her success” — a circumstance that the Journal says is “rare.”
5. Google foes see hope in Europe
Some of Google’s (GOOG) smaller rivals in Europe are hopeful that the new antitrust chief of the European Commission, Margrethe Vestager, understands what harm has been done to their business by the industry’s dominant player. There is hope among executives interviewed by Reuters that complaints brought against Google could soon result in action, though Vestager has said she doesn’t intend to rush into a decision.
Editor’s note: An earlier version of this story incorrectly implied that Keith Sherin is CEO of GE. He is, in fact, Chairman and CEO of GE Capital. The story has been updated to reflect this.