July 10 (Bloomberg) -- General Electric Co., two months after placing its century-old appliance unit on the block, said it plans to spin off its entire GE Consumer & Industrial group to shareholders as Chief Executive Officer Jeffrey Immelt struggles to raise a slumping stock price.

The strategy means GE may exit more of the most well-known divisions to consumers, including electrical switches and the light-bulb business started by co-founder Thomas Edison. GE isn't ruling out a sale or other options for the group, which had 50,000 employees and $13.3 billion in sales last year, or about 7.4 percent of the company's total.

Immelt, who lowered his 2008 profit targets in April, put the appliance division in play a month later and told investors then that GE might consider a spinoff of the broader group. Shareholders have called on Immelt to speed divestitures to focus on businesses with more growth potential such as jet engines, energy and health care. GE's stock has lost a quarter of its value this year.

``This is really a reflection of the fact that these are not growth engines for the company,'' said William Batcheller, who helps manage $85 million including GE shares with Butler Wick & Co. from Youngstown, Ohio. ``This has been Immelt's mantra: `We're a growth company and were going to invest in the businesses that are growing and we're going to trim the businesses that aren't.'''

Fairfield, Connecticut-based GE rose 45 cents to $27.64 at 4:01 p.m. in New York Stock Exchange composite trading. The stock has dropped 27 percent in 12 months.

`Improving the Portfolio'

Immelt, who is scheduled to release second-quarter earnings results tomorrow morning, said in April that said GE may earn $2.20 to $2.30 a share, less than the minimum of $2.42 he predicted earlier. The same day, GE reported a surprise decline in first-quarter profit, and shares fell the most since 1987.

The GE Consumer & Industrial group's earnings would account for about 5 cents a share of GE's total this year, according to a note to clients today from Citigroup Inc. analyst Jeffrey Sprague. ``While the deal does not unlock value per se, it is a step toward improving the portfolio,'' wrote Sprague, who rates the stock ``hold.''

GE Consumer & Industrial is part of a larger group called GE Industrial, one of six major segments that will continue after the spinoff. The others are NBC Universal, GE Money, GE Infrastructure, GE Commercial Finance and GE Healthcare.

In May, Immelt noted the consumer businesses weren't as global as the company's other divisions. More than half of GE's total revenue now comes from overseas.

`Most Efficient Step'

``It became clear that the fastest, most efficient step we could take in completing the transformation of our industrial portfolio would be to focus on a possible spinoff of the entire unit,'' Immelt said in a statement today. ``This is consistent with the strategy we have been executing to transform the GE portfolio for long-term growth and makes sense for GE shareholders.''

Consumer & Industrial accounts for about 15 percent of the parent company's workforce. GE told employees in an e-mail this morning it's pursuing this strategy while not ruling out a sale or partnerships.

GE Consumer & Industrial Chief Executive Officer James Campbell said in an e-mail to employees that ``we've hit a rough patch in terms of the U.S. economy, but we'll come through this even stronger than before.''

Immelt said in May the ``most conservative'' timing would be early 2009 for whatever GE does, though ultimately it depends on market conditions.

Appliance Unit

Analysts including Citigroup's Sprague have questioned whether Immelt can get acceptable bids in a slowing U.S. economy. In such a ``difficult'' environment, a spinoff may make more sense and GE is ``seriously'' considering the move, Immelt said at the May investor conference.

Possible bidders for the appliance unit include Arcelik AS, Turkey's largest maker of household appliances; Hong Kong-based Haier Electronics Group Co. and South Korea's LG Electronics Inc. Such a sale could fetch $3 billion to $8 billion, according estimates from analysts including Citigroup Inc. and Goldman Sachs Group Inc.

GE has cut costs, product lines and jobs from all three divisions in the GE Consumer & Industrial segment for years to keep profitability rising. The lighting operations announced last year that another 1,400 positions would be slashed as it shut incandescent plants in favor of manufacturing more efficient, compact fluorescent bulbs overseas.

2nd-Quarter Earnings

Immelt, 52, may say tomorrow that GE earned 53 cents to 55 cents a share in the second quarter. The average of 15 analysts' estimates in a Bloomberg poll has GE earning 54 cents, unchanged from a year earlier.

Since unveiling his basic plan to shift out of economically sensitive sectors in December 2002, Immelt has divested more than $50 billion in proceeds from selling GE units, including the plastics and insurance units, while making more than $80 billion in purchases in faster-growing areas such as wind turbines and aviation. GE targets an annual profit increase of 10 percent.

National City Corp. analyst Stephen Hoedt, who counsels his firm's money managers not to add to the 16 million GE shares it owns, told Bloomberg Television he still considers GE a ``hold'' after today's announcement.

``It does make sense from a strategic perspective,'' Hoedt said. ``However, it doesn't address the structural issues the company is facing, vis-a-vis the overall exposure that the company has to financials and financial services.''

Immelt is working to divest the divisions and reshape GE while maintaining its top-ranked AAA credit rating. Credit- default swaps on GE climbed 10 basis points to 165 basis points. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to$1,000 a year.

Goldman Sachs Group Inc. is advising on the disposal.

To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net.

Last Updated: July 10, 2008 16:14 EDT