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Threes Company: GE to Split Into Thirds

By The Daily Upside – Nov 9, 2021 at 10:00PM

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One of the best-known companies in American history will soon be three. General Electric, the iconic conglomerate founded by Thomas Edison — a...

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One of the best-known companies in American history will soon be three.

General Electric, the iconic conglomerate founded by Thomas Edison — a tech pioneer so ahead of his time he was making viral cat videos in 1894 — stunned the business world Tuesday when it announced it's breaking itself up.

The Power of Three

Twenty years ago, GE's market capitalization of $401 billion made it the world's largest company. Five years ago, it was still in the top 10. Today, it doesn't even crack the top 100.

So what happened? While being a diversified juggernaut in the 20th-century era of conglomerate titans worked well back then, GE eventually bit off more than it could chew. With holdings in finance, energy, television, consumer electronics, and more, it became bloated, exposed to downturns in multiple industries, and hobbled with debt.

GE's financial services arm was hit especially hard after the 2008 financial crisis and was later sold off. It also dumped its oil and gas businesses, its biotech business, its locomotive business (of course they made those), and its home-appliance business. So the split is simply the culmination of years of rearranging a jumbled business empire into something coherent:

  • GE will spin-off GE Healthcare — a manufacturer of MRI scanners and other hospital equipment that brought in $17 billion last year — in early 2023.
  • GE's power unit, renewable energy branch, and digital division — which together had $33 billion in revenue in 2020 — will team up and go solo by early 2024.

Lone Jet: That leaves only GE Aviation, which builds and maintains jet engines. The pandemic has been hard on the division, but it counts Boeing as a major client and made $22 billion in revenue in 2020.

Stock Lights Up: For now, GE stock is going up — shares rose 3.4% on Tuesday as markets reacted positively to the news. GE shareholders will likely get dividends of newly issued shares in the spin-off businesses. Guess we'll also have to wait and see what happens to that iconic, old-school logo.

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