In a historic move, GE has completed its split into two separate companies, marking the end of an era for the once iconic industrial icon that provided a wide range of products and services for the average American family. Founded in 1892 by Thomas Edison, GE grew to become the world’s largest and most valuable company under the leadership of Jack Welch. However, in the 21st century, the company faced significant financial challenges due to poorly timed deals and high levels of debt, leading to its decline.
In an effort to address its financial woes, GE focused on share repurchases and dividends to support its stock price, but these measures were unsuccessful. By 2018, the company was removed from the Dow Jones Industrial Average, a significant blow to its reputation. Larry Culp was appointed as CEO in 2018 and initiated a strategy to reduce debt by spinning off and selling various divisions. This included divesting NBC, its appliance business, and other units to competitors.
Under Culp’s leadership, GE accelerated its divestiture efforts, selling off its iconic light bulb unit and its aircraft leasing business, effectively bringing an end to its powerful finance unit, GE Capital. The company faced challenges during the Great Recession in 2009, losing its AAA credit rating due to its involvement in lending, including subprime mortgages. In 2021, GE announced plans to split into three separate companies – GE Healthcare, GE Aerospace, and GE Vernova, focusing on healthcare, aerospace, and energy generation.
Culp’s strategic moves helped to revive GE’s stock price, with shares nearly doubling in 2023 and continuing to show growth. The split into two companies, GE Aerospace and GE Vernova, was announced in 2021, with GE Aerospace retaining the iconic GE stock symbol and Culp remaining as the CEO. There is speculation about Culp potentially becoming the successor to the retiring CEO of Boeing, another troubled US company and a major customer of GE’s engines. Culp has expressed confidence in Boeing and dodged questions about his interest in the CEO position.
Overall, GE’s split marks the end of a chapter for the once mighty industrial icon, but also signals a new beginning with a focus on streamlined operations and profitable business segments. Culp’s leadership has been instrumental in driving the company’s transformation and improving its financial performance, setting the stage for a potentially brighter future for GE Aerospace and GE Vernova.
