General Electric’s Green Parachute

General Electric’s had a pretty tough year. The company’s financial services group took a big hit from exposure to subprime loans, and an unnannounced and unexpected six percent drop in its first quarter earnings sent GE’s stock price down 10 percent in a single day, taking the markets along with it. Last week General Electric sold of its struggling Japanese consumer finance business, while the company has yet to find a buyer for its consumer electronics business. Rumor has it China’s Haier is interested in becoming the Lenovo to GE’s IBM. And, to add insult to injury, ex-CEO Jack Welch came out swinging against current CEO Jeff Immelt, telling CNBC audiences Immelt “has a credibility issue” and that “he’s getting his ass kicked.” The company’s stock is  trading 14 points off the $42.15 high it reached on October 27, with only a single bump cutting through the long, downward slog.

Just today, GE received the public company’s kiss of death - the Jim Cramer endorsement.

So maybe it’s a good thing the conglomerate is getting back into what it does best - building really, really big stuff. Earlier this week GE announced it was forming a joint venture with Mubadala, Abu Dhabi’s sovereign wealth fund. The $8 billion commercial finance and R&D joint venture will focus on a number of GE’s strong suits, including water tech, greentech, industrial construction, and aviation. Through the JV, GE will gain access to expanding markets in the Middle East and Africa, where the majority of its revenue came from in the last quarter. Mubadala will gain access to GE’s commercial finance experience, as well as some $50 million of GE’s money to put to work in its second Masdar Clean Tech Fund. Credit Suisse, the manager of the first Masdar fund has, apparently, been shown the door.

While the JV gives GE access to expanding markets - the $8 billion fund could be refinanced on debt at least five times, giving it a book value of $40 billion - the smaller Masdar ‘contribution’ buys GE an Economagination center in the new, zero emissions Masdar City currently under development in Abu Dhabi. This puts GE in good company - Applied Materials has been contracted to build out a $2 billion PV manufacturing center for Masdar, while Mubadala just acquired metal and petroleum recycler DuraTherm. Of course, Mubadala’s plan to eventually own 10 percent of General Electric  - approximately $3.5 billion - give GE a lot of insurance going forward.

But where is that forward? In a lot of ways, GE’s future is linked to its past. Greentech - represented primarily through its wind and desalination divisions - have been a boon to the company in period of falling expectations and problems related to its non-core business, Deal or No Deal notwithstanding. GE should continue pursuing these kinds of partnerships, especially in markets where the company can put its technology to work directly. Revenues from the Middle East were up 50 percent between 2006 and 2007 - that’s a lot of desalination plants. The trick now is to figure out how to sandproof the TH!NK.

Oh, and just for good measure, Mubadala is now actively seeking to acquire a number of unnamed German renewables companies.