The GE name is up for sale, at least in one of its oldest businesses, the appliance manufacturing business.  GE entered the appliance world in 1907, now 101 years later its looking to auction it off to the highest bidder.  Investors should begin to wonder if this spinoff is directly correlated to its losses with the GE Money bank with is drowning in subprime exposure and is systematically writing down bad debt.

The fact that GE has to even look to sell its appliance business, for whatever reason is a bit alarming.  Though no reason has or probably will ever be stated, GE is looking for $5 to $6 Billion in cash at the auction block to dump what is both an extremely profitable business, and something that has been around for a very long time.  Its refrigerators, stoves, dishwashers down to electric mixers make up a very well known brand.  Surely the buyer is getting a great deal for a company that literally “makes it all.”

General Electric is likely preparing for more writedowns.  This sell off will net the company plenty of instant cash to cover any future writedowns and keep earnings up to a sustainable level.  Keeping shareholders and investors happy is extremely important for GE which has much to lose from its own credit market investments and its bond rating.  If earnings turn sour, one of the world’s largest and longest running corporations will grind to a standstill.

The sale of its appliance business will likely cut heavily into future revenue.  There isn’t much reason to believe that GE has the possibility to create any possible returns from the lump sum of cash, nor does it need to sell units for financing.  There is plenty of available credit to GE which leaves me to believe that the company is preparing for a heavy loss.

No investment here, GE looks worse and worse.  Though it was originally recommended a buy, this selling of assets looks less than appealing for the investor.  Hold out to see what quarterly earnings bring.