The end of an era: the disintegration of General Electric
2021-11-16
Ge, once the symbol of the integrated group, announced a major restructuring plan on Tuesday. The company reorganized "one into three" into three listed companies, focusing on aviation, health care and energy respectively. After the news, Ge shares rose nearly 11% before us trading on Tuesday.
According to Tuesday's announcement, GE Healthcare will spin off in early 2023. Ge will merge Ge renewable energy, GE power generation and Ge digital businesses into a single department and then spin off in early 2024. The rest of the company will include Ge aviation, the aircraft engine manufacturing business.
After the spin off, Larry cup, the current CEO of Ge, will lead the general aviation business and serve as the non-executive chairman of general healthcare. Scott strazik, the current CEO of GE power, will be the CEO of the combined renewable energy, power and digital business.
The company said that with the improvement of operation and the improvement of cash flow and profit margin, the company is expected to achieve the goal of reducing debt by US $75 billion in three years by the end of this year.
Tuesday's announcement ended years of speculation about GE's future. Since the 2008 financial crisis, GE has been in deep trouble and its business scale has been shrinking. The company has sold most of its businesses, including GE Capital, a financial subsidiary.
Larry cup, CEO of Ge, said in the announcement:
Today is a decisive moment for GE, and we are ready.
This also marks the end of the Ge "empire" established by Jack welchand and his predecessors.
Ge was jointly founded by Thomas Edison at the end of the 19th century.
With the changes of the U.S. economy, Ge experienced several transformations in the last century and became a leader in the field of home appliances, jet engines and power turbines.
In the 1980s, under the leadership of Jack Welch, the late former CEO of the company, Ge expanded rapidly: the company entered the financial services industry and re entered the broadcasting industry through the acquisition of NBC. This series of operations brought enviable revenue growth and returns to investors.
When Jack Welch was in charge, GE's share price rose nearly 28 times. When Jack Welch was about to leave office in 2000, Ge became the most valuable company in the United States with $594 billion.
At that time, it was the financial business that pushed Ge to an all-time high. The company's related business has gradually expanded from the initial consumer loan to car leasing, real estate investment, private credit card and other fields. By 2001, GE's financial business had 24 enterprises in 48 countries with assets of US $370 billion.
But after Jack Welch retired, Ge experienced a series of shocks including the Internet bubble burst and 9/11. His successor Immelt also changed his predecessor's thinking and started a large-scale "slimming campaign": the company stripped off nbcuniversal media business and reduced the scale of general finance department.
The financial crisis in 2008 exacerbated the plight of Ge. The company's "profit engine" financial industry suffered a serious impact and its scale shrank significantly: from 2008 to 2014, the final net investment of GE Capital decreased from US $538 billion to US $363 billion.
GE's business focus has also undergone several adjustments. The company has bet on digital transformation, but the whole transformation is not smooth because the plan is too radical.
The continued slump has seriously dragged down GE's share price, which has underperformed the market for a long time in the past 20 years.
Due to the continuous downturn, GE was excluded from the Dow Jones industrial index in 2018. Since 1907, General Electric has been one of the 30 constituent stocks of the Dow.
Source: Wall Street Author: Xu Chao
According to Tuesday's announcement, GE Healthcare will spin off in early 2023. Ge will merge Ge renewable energy, GE power generation and Ge digital businesses into a single department and then spin off in early 2024. The rest of the company will include Ge aviation, the aircraft engine manufacturing business.
After the spin off, Larry cup, the current CEO of Ge, will lead the general aviation business and serve as the non-executive chairman of general healthcare. Scott strazik, the current CEO of GE power, will be the CEO of the combined renewable energy, power and digital business.
The company said that with the improvement of operation and the improvement of cash flow and profit margin, the company is expected to achieve the goal of reducing debt by US $75 billion in three years by the end of this year.
Tuesday's announcement ended years of speculation about GE's future. Since the 2008 financial crisis, GE has been in deep trouble and its business scale has been shrinking. The company has sold most of its businesses, including GE Capital, a financial subsidiary.
Larry cup, CEO of Ge, said in the announcement:
Today is a decisive moment for GE, and we are ready.
This also marks the end of the Ge "empire" established by Jack welchand and his predecessors.
Ge was jointly founded by Thomas Edison at the end of the 19th century.
With the changes of the U.S. economy, Ge experienced several transformations in the last century and became a leader in the field of home appliances, jet engines and power turbines.
In the 1980s, under the leadership of Jack Welch, the late former CEO of the company, Ge expanded rapidly: the company entered the financial services industry and re entered the broadcasting industry through the acquisition of NBC. This series of operations brought enviable revenue growth and returns to investors.
When Jack Welch was in charge, GE's share price rose nearly 28 times. When Jack Welch was about to leave office in 2000, Ge became the most valuable company in the United States with $594 billion.
At that time, it was the financial business that pushed Ge to an all-time high. The company's related business has gradually expanded from the initial consumer loan to car leasing, real estate investment, private credit card and other fields. By 2001, GE's financial business had 24 enterprises in 48 countries with assets of US $370 billion.
But after Jack Welch retired, Ge experienced a series of shocks including the Internet bubble burst and 9/11. His successor Immelt also changed his predecessor's thinking and started a large-scale "slimming campaign": the company stripped off nbcuniversal media business and reduced the scale of general finance department.
The financial crisis in 2008 exacerbated the plight of Ge. The company's "profit engine" financial industry suffered a serious impact and its scale shrank significantly: from 2008 to 2014, the final net investment of GE Capital decreased from US $538 billion to US $363 billion.
GE's business focus has also undergone several adjustments. The company has bet on digital transformation, but the whole transformation is not smooth because the plan is too radical.
The continued slump has seriously dragged down GE's share price, which has underperformed the market for a long time in the past 20 years.
Due to the continuous downturn, GE was excluded from the Dow Jones industrial index in 2018. Since 1907, General Electric has been one of the 30 constituent stocks of the Dow.
Source: Wall Street Author: Xu Chao