General Electric, once a powerhouse in American manufacturing, has completed its split into three separate companies, marking the end of its existence as a sprawling conglomerate. The company, known for its wide range of products including light bulbs and jet engines, has announced the creation of three focused entities in aviation, energy, and health care. This decision to split comes after years of paring down by the massive conglomerate and signals a shift away from the corporate structure that dominated U.S. business for decades.
The split of GE into three companies, namely GE Aerospace, GE Vernova, and GE Healthcare, is seen as a historic step in the multi-year transformation of the company. GE Aerospace, the remaining core of GE, is led by CEO Larry Culp and specializes in manufacturing jet and turboprop engines. It retains the “GE” ticker symbol and posted adjusted revenue of approximately $32 billion last year. On the other hand, GE Vernova encompasses entities such as GE Renewable Energy, GE Power, GE Digital, and GE Energy Financial Services. It trades on the NYSE under the “GEV” ticker symbol and is involved in generating about 30% of the world’s electricity. Lastly, GE Healthcare provides diagnostic scanners, imaging patents, and software.
CEO Larry Culp emphasized in a letter to shareholders that the split of GE into three companies represents a new beginning rather than an end for the company. He highlighted the long history of GE, recalling the words of CEO Charles Coffin, who emphasized the importance of employee zeal and cooperation in the creation of the General Electric Company. The completion of the split signifies a shift in focus for GE towards more streamlined and specialized operations in aviation, energy, and health care. The move is expected to drive efficiency and innovation within each of the independent entities.
In its heyday, GE’s stock was highly sought after on Wall Street under the leadership of Jack Welch, who was considered one of America’s first CEO “superstars.” Under Welch’s tenure as CEO, GE’s revenue grew significantly, and the company’s value increased thirty-fold. However, the stock performance began to lag towards the end of Welch’s rule, leading to a series of changes within the company. The decision to split GE into three separate companies marks a significant shift in strategy for the once-dominant conglomerate and reflects broader trends in the corporate landscape towards focused and specialized operations.
Despite facing challenges in recent years, GE remains an iconic company with a rich history in American manufacturing. The completion of the split into three separate entities is seen as a transformative step for GE, signaling a new era focused on driving innovation and growth in aviation, energy, and health care. With each of the independent companies now trading on the stock exchanges, GE is poised to thrive in a more focused and streamlined business environment. The success of this restructuring effort will be closely watched by investors and industry observers as GE seeks to navigate the evolving landscape of modern business.
