As problems continue to mount for troubled industrial conglomerate General Electric (NYSE:GE), some investors feel as though the company would be better off if it was broken up. 

That was true three years ago, in 2017, and it's just as true today. GE was (and is) a troubled company. It was (and is) bogged down by debt and the poorly timed managerial decisions of (now former) CEO Jeffrey Immelt.

In spite of that, the company has undergone a stunning transformation over the last three years. Here's what's happened and why it hasn't really helped GE outperform... at least, not yet.

Six Edison bulbs in a row. Only the fifth is lit.

Image source: Getty Images.

Everything but the kitchen sink

By the end of 2016, GE had already sold its storied appliances division to Chinese company Haier (which still maintains the GE brand name), had spun off its consumer credit card business as Synchrony Financial, and had begun ditching its various other financial businesses.

However, even after those divestments, GE still had seven different business lines of various sizes:

A pie chart showing GE's businesses by revenue as of 2017.

Data source: General Electric. Chart by author.

The company's energy segment, bulked up by the 2015 purchase of Alstom Power, accounted for 37% of its revenue. Three other units -- aviation, healthcare, and oil and gas -- together provided about half of GE's 2017 sales. Meanwhile, GE's transportation business -- which primarily built locomotives -- its iconic light bulb business, and what was left of its financial business hardly contributed at all to the top line. 

But all that was about to change.

Slimming down

In less than three years, GE shed three of those businesses and essentially shut down a fourth. The result is a much more focused company:

A pie chart showing GE's businesses by revenue as of the end of 2019.

Data source: General Electric. Chart by author.

By the end of 2019, GE had just four revenue-generating businesses. The energy segment has been split into a power unit and a renewable energy unit, while aviation and healthcare remain as stand-alone business lines.

Gone is the troubled oil and gas segment, merged with oilfield services company Baker Hughes and then spun off in late 2017. Gone, too, are the low-margin transportation and consumer lighting units, both sold off in early 2019. A severely slimmed-down GE Capital, the company's financial arm, is still around, but thanks to legacy liabilities, it's actually revenue-negative and likely to remain so for the foreseeable future. 

So, while the 2016 General Electric didn't technically get "broken up," a lot of it has been parceled off and sold.

The good, the bad, and the unprofitable

You'd think that after all those divestments, GE would be in great shape, with cash from business sales filling its coffers, and a narrower focus helping maximize profits.

Sadly, that's not what's happened.

There have certainly been some benefits to the streamlining, including a significant reduction in GE's massive debt load. But a bigger problem can best be summed up by one final chart: 

A pie chart showing GE's businesses by 2019 profit.

Data source: General Electric. Chart by author.

As of the end of 2019, only two of GE's units, healthcare and aviation, had a significant impact on the bottom line. Sometimes two outta four ain't bad, but in this case, even those two are facing challenges.

Healthcare sold off its biopharma business to Danaher at the end of the first quarter, and we don't yet know how that will impact the unit's 19% profit margin. Meanwhile, the grounding of the Boeing 737 MAX jet -- for which GE Aviation was the sole engine supplier -- coupled with COVID-19's effects on the aviation industry, has already hit General Electric's aviation business hard. In Q1, the unit's profit margin slipped from 2019's 20.7% to just 14.6%. It's likely to be even lower in the second quarter, and there's no telling when it will recover. 

The big picture

For decades, GE was a consistent outperformer due to its diversified conglomerate structure. Weakness in one unit could be offset by strength elsewhere in the portfolio. Unfortunately for GE, the weak businesses began to outnumber the strong ones. Getting rid of those underperformers started to rebalance the company's portfolio, but now even the company's strongest businesses are running into trouble. 

In this case, a leaner structure isn't enough to save GE. The coming years look like they're going to be a long, hard slog for the once-formidable company.