When General Electric (NYSE:GE) CEO John Flannery presented the company's investor update on Nov. 13, the stock market didn't take it well. It sent GE shares below $19, lower than they'd been since 2012. As part of the update, Flannery officially announced that he was looking to sell $20 billion in assets, including the company's transportation and consumer lighting units. 

While this may sound pretty dire -- perhaps even a little like a breakup of the conglomerate -- it's actually unlikely to matter much to investors. Here's why.

A row of six hanging light bulbs with the fifth lit.

Things look pretty bleak for industrial conglomerate General Electric thanks to a trend of underperformance and a dividend cut. Image source: Getty Images.

The lighting's on the wall

The decision to rid GE of its famous consumer lighting unit should come as no surprise to anyone. Back in 2015, GE separated its consumer and industrial lighting units into two new units it called "GE Lighting" and "GE Current," respectively. After the company's 2016 sale of its consumer appliance unit to Chinese manufacturer Haier, GE Lighting was the sole consumer business in GE's immense portfolio.

As if that weren't enough, a leaked internal email from June -- which was later verified by GE -- informed GE Lighting employees that "GE is formally beginning discussions with buyers around a proposed sale of our GE Lighting business." 

GE is actually a bit late to the party on this: Its rival Siemens already spun off its consumer lighting business -- which makes Sylvania brand bulbs -- as Osram Licht back in 2013. Dutch company Royal Philips NV followed suit in 2016, spinning off its Philips brand consumer lighting business.  

So it's almost a guarantee that GE Lighting's pending departure was already priced into the stock, even if that of the GE Current industrial lighting business might not have been. Regardless, it probably won't matter for investors for another big reason.

Small potatoes

Despite bringing in $15.1 billion in revenue for GE in 2016, GE's "Energy Connections and Lighting" business unit -- which includes GE Current, GE Lighting, and the already-sold GE Industrial Solutions -- has a profit margin that is laughably small. As in, bringing in just $311 million in profits on its $15.1 billion in revenue, for a profit margin of just over 2%. Compare that to the overall profit margin of the company's industrial segments -- 15.6% -- and you can see just how little these businesses contribute to the company's bottom line.

Or, put another way, Energy Connections and Lighting contributed 13.4% of the company's 2016 industrial revenue and just 1.8% of the company's industrial profits. The corporate benefits of spinning off or selling these businesses almost certainly outweigh the drawbacks, because they will almost certainly help GE lower its overall administrative costs.

Transportation, on the other hand, has a comparatively high profit margin. At 22.6%, the unit had the second-highest profit margin of GE's industrial divisions in 2016, trailing only Aviation. That said, it's also by far GE's smallest unit, generating just $4.7 billion in revenue in 2016. Arguably, such a high-margin business could be sold for an attractive price, allowing GE to cut some expenses while only losing about $1 billion in annual profits. That has to look like a winning proposition to Flannery. 

Where to go from here

When looking at how little an impact these asset divestitures would have on the company, a certain analogy regarding deck chairs and the RMS Titanic comes to mind. 

Now, obviously, GE is making other changes to its operations in addition to ditching its Transportation, Lighting, and Industrial Solutions units. The company has already merged its oil and gas division with oilfield services company Baker Hughes to form independent entity Baker Hughes, a GE Company, which is 62.5% owned by GE. According to Flannery in his recent investor presentation, the company is weighing its options, but would like to reduce its commodities exposure.

Then there's the slimming of the board from 18 positions to 12, promised corporate cost reductions, and of course, the halving of the dividend. The thing is, none of these changes seem particularly transformative. They largely leave GE's existing structure -- and, apparently, strategy -- in place. If investors were looking for a bold new vision from Flannery, they came up empty-handed after this presentation. 

Investor takeaway

Certainly, a series of incremental changes -- or "baby steps," if you prefer -- can lead to outperformance in the long run. And these moves by Flannery will certainly free up some cash that could be used to make major changes like big acquisitions or bold new initiatives... down the road.

For investors, though, the stock price isn't going to rise significantly until the company either makes major changes to its operations -- which these aren't -- or starts to significantly improve its fundamentals -- which these moves may help with, but don't do immediately.

It looks like investors are in for a rough ride over the next year or so with GE.

John Bromels owns shares of General Electric. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.