GE Closing Out Subprime Mortgage Group

The shares of General Electric rallied today as the industrial giant announced strong second quarter results and said it would sell its subprime mortgage business.

Fairfield Conn.-based GE (NYSE: GE) reported its WMC Mortgage unit sold off about $3.7 billion, or 75 percent, of its subprime mortgage loans in the second quarter, generating a loss of $182 million. GE has already announced it would sell WMC, laying off more than 460 of the staff at the unit and taking a $500 million charge in the first quarter.   

This Wednesday, GE announced it would terminate its proposed $8.1 billion merger deal with Abbott Labs. Instead GE is putting more money into its stock buy back program, now worth $14 billion with $12 billion to be spent before the end of the year, according to the MarketWatch news service.

GE reported net income of $5.4 billion in the quarter, up more than 10 percent from $4.9 billion in the same period a year ago. Revenues this year came in at $42.3 billion, up more than 12 percent from $37.7 billion a year ago. Investors bid up GE’s stock 2.3 percent in midday trading to $39.88.