GE Will Split Into Three Units, Ending Conglomerate for Good (bloomberg.com) 52
General Electric will split into three separate companies in a stunning breakup of the iconic manufacturer founded by Thomas Edison whose sprawling businesses once made it the world's most valuable company. The shares surged. From a report: GE will spin off its health care business in early 2023 and combine its renewable energy, fossil-fuel power and digital units into a single energy-focused entity that will be spun off a year later, the company said Tuesday. The remaining company will consist of GE Aviation, its jet-engine division. "What we're doing today is creating three outstanding investment-grade, global leaders in health care, aviation and energy," Chief Executive Officer Larry Culp said in an interview. "GE has led in these markets for a long time and today we're setting ourselves up for another century of leadership."
Alternative link (Score:4, Informative)
The bloomberg link is kinda sorta paywalled, here is an alternative from reuters:
https://www.reuters.com/busine... [reuters.com]
Lets hope the new companies are Called GE Aviation, GE Health and GE Energy, and that the tickers are GE-A, GE-H and GE-E instead of the Kindryl clusterFSCK ... ;-)
Re: Alternative link (Score:4)
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The King is Dead! Love live shareholder value! (Score:5, Informative)
Thanks for the alternative link, and a reasonable FP, but it still didn't address my burning question:
"This creates real value, how?"
Actually it's a rhetorical question. The answer is obvious: "Not."
It's a stupid shell game, but the speculators and gamblers see more ways to play games with a few more cards. And somehow that means the "cards" for the dying brand are each worth another 6%? Of WTF are they worth? Near as I can tell, every nickel GE has ever invested in advertising to build up the brand's reputation and "brand value" is being flushed down the toilet. Almost as funny as the artist formerly known as Prince, eh?
Another branch of the discussion already mentioned HP's self-immolation, and today Toshiba announced an amusingly similar division into three fragments, too. https://asia.nikkei.com/Spotli... [nikkei.com] (Of course the underlying and sad reality is that Toshiba killed itself some years ago. Doubled down too many times and all of the bets went bust. How rotten is the core of GE now?)
Must be the season for maximizing "shareholder value" with this sort of game? Anyone have any seasonal stats on when the most corporate divisions, bankruptcies, and suicides are announced?
Solution approaches, anyone? If you've seen my prior comments on corporate cancers, you know that I think the best general solution approach would be changing to (or at least evolving towards) a pro-freedom anti-greedom tax system. Let them divide themselves to increase their retained earnings. Separating business divisions is completely the wrong way to do it. Instead, the companies should be split up within lines of business. There MUST have been something good there or the division never would have succeeded in the first place. So the good bits should be reproduced in several competing companies, and at least one of the children will have a chance to find and fix the bad bits.
(There was another branch focusing on the CxOs as the villains. I think it would have been a better FP, for whatever that's worth. However, I mostly dismiss the personalities these days. Too much competition to be the biggest idiot in the monkey barrel. If Jack Welch and Carly Fiorina hadn't screwed the pooch, someone else would have come along. I don't even know who screwed up Toshiba, and as a shareholder you'd think I should know or at least care.)
(In other tangential and unrelated news, it's a good thing Slashdot doesn't have an insert-sound feature. One of the messaging systems I have been "encouraged" to use includes a way to insert sounds. Very annoying intrusions, but it has led to the thought experiment of inserting a flushing sound after certain comments. (And no, I haven't done it or even heard such a sound there, but now I know what's coming.) As regards this story, the sound would IMNSHO be appropriate after future mentions of GE. <FLUSH>)
Re:The King is Dead! LONG live shareholder value! (Score:2)
Stupid fingers.
Re: The King is Dead! Love live shareholder value! (Score:2)
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<fart>, <puke>,<cat puking>, <dog puking -- does that sound different?>, ...
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Let's hope they're not called GE. It's nearly impossible to figure out which are different entities. Buying a freezer? It's a Haier, but branded with a GE logo. Want a light bulb? Savant makes those, but they use the exact same GE logo on them.
People think that Meta is a dumb name for Facebook's parent company or that Alphabet is bad for Google, but at least they aren't just naming everything the same thing.
All I want to know is... (Score:3)
Re:All I want to know is... (Score:4, Funny)
Re: All I want to know is... (Score:2)
Re: All I want to know is... (Score:5, Informative)
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That reminds me. I should have included IBM in my list of corporate self-immolations. I was still there when "nice guy" Rometty sold ThinkPad to Lenovo and basically exited the computer business. Pretty sure share prices went up in response, but can't remember or care. Really? Already 16 years back?
Not GE (Score:3)
GE sold off it's military aerospace division to Lockheed in the early 90's. I think they sold off the rights to the minigun before that. They still make commercial airplane engines, though.
C suite looking for a payout (Score:2)
Break up the company whether it makes good business sense or not but use bogus BS such as "core focus" and "realign" to fool the gullible then collect fat bonus as shares go up. Meanwhile the broad expertise is lost. In 20 years time re-amalgamate. Rinse and repeat.
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Break up the company whether it makes good business sense or not but use bogus BS such as "core focus" and "realign" to fool the gullible then collect fat bonus as shares go up. Meanwhile the broad expertise is lost. In 20 years time re-amalgamate. Rinse and repeat.
Hey, it worked for Carly Fiorina at Hewlett Packard.... actually, nevermind
Re:C suite looking for a payout (Score:5, Insightful)
It's an awkward conglomerate. In general, investors pay a premium to be able to be selective in their exposure. I invest in energy, but not aircraft, for example; having a GE Energy company is more appealing as an investor. Meanwhile, someone who mainly invests in aircraft may have just the opposite viewpoint.
Broad conglomerates are useful when their branches have synergy, sharing manufacturing capacity, talent, patents, etc across all their branches. But GE is a weird mix, esp. healthcare.
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Aviation and Energy should have tons of theoretical synergy. After all, whether it's aircraft engines generating thrust or power turbines generating electricity, the same technology is used. In fact, Aviation's tech slowly migrates down to Energy, albeit at a slower pace than you'd think.
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And there's no reason that the two sister-companies cannot still have licensing agreements and shared services between them. It's all just contract paper - when they split, they just sign a perpetual ongoing license agreement for turbine tech for $1/year.
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Aviation and energy are going down separate paths. Jet engines will still be a thing 40 years from now, but gas power plants maybe not so much. They can share in the meantime, but Energy can now investigate other paths without worrying about dragging down Aviation if they screw up.
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GE makes a ton of money in the oil and gas, but they're deep in wind, solar and nuclear as well.
GE's specialty is that they make all sorts of high efficiency turbines, both for jets and power plants. They're being split up on paper, but a lot of GE's facilities are shared, I don't see this split being very deep or strong due to the shared roots.
Conglomerate (Score:2)
GE is a bizarre mix. Healthcare equipment. Aircraft engines. Industrial control software. A capital investment wing. Industrial-scale power equipment.
It made a lot more sense when they were much larger, but now it's, pretty much, everything that's left after the previous divestments.
The other thing people miss is - managing a small business is hard, managing a medium-sized business is really hard, and managing an enormous conglomerate is nearly impossible. Now imagine a conglomerate made up of entirely diff
Re: Conglomerate (Score:2)
One could argue that related businesses, or at least interdependent businesses, would be easier to manage if they were under one roof. But if you're treating them as independent or even quasi independent units that still compete for some common pool of cash or executives' mental cycles, then it really puzzles me how such an entity can be more profitable than just owning shares of separate businesses. I assume the conglomerate began as a pissing contest in a different time and never quite got extricated out
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It all makes sense in the grand scheme of things. You have the capital investment wing which works with the industrial-scale power equipment which needs industrial control software to make aircraft engines which help fly healthcare equipment around the world.
Or, alternately, the capital investment wing helps create healthcare equipment needed to rep
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In many ways, managing a small business is hardest. You can't afford people to help and unlike a large business you can't just announce that you've decided to pay the bills a couple weeks late and if anyone objects, talk to the hand.
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In many ways, managing a small business is hardest. You can't afford people to help and unlike a large business you can't just announce that you've decided to pay the bills a couple weeks late and if anyone objects, talk to the hand.
I have relatives who own a small store, and while you are right about labor (every time minimum wage goes up they end up hiring less seasonal help) their suppliers are actually pretty flexible about payments. Being a small store, if they have a slow year and have to hold off on completely paying their suppliers, the suppliers are usually OK with it, as it's not a whole lot of money in the grand scheme of things. If a huge retailer decides that they are going to hold off on paying their suppliers, that's a *
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That varies by industry. In other things, suppliers get quite antsy if you go a single day over net 30 and frequently will refuse any new orders until you bring the balance to zero. If it happens more than once, they won't even answer the phone when you call.
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Normally I would agree, but there's not a lot of synergy between people making aircraft jet engines, and people making CT scanners. There's zero customer crossover between many of their business lines if you take "United States Department of Defense" off the list.
This could be a way to jettison a shitload of debt through having multiple stock issues in order to make three healthy companies from one somewhat-healthy industry titan. And aren't we always bleating on about "too big to fail" around here anyway
Most valuable but also a house of cards (Score:5, Interesting)
Re:Most valuable but also a house of cards (Score:5, Insightful)
Jack Welch was moron. He acquired companies because he could, not because they fit into the rest of GE. He was also the fellow who got GE involved in real estate. When the music stopped, so did GE. But he was nowhere to be found since he retired in 2001.
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Welch focused on financial gimmicks instead of R&D, and is now paying the price. Intel made a similar mistake.
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Carly Fiorina rose to the CEO due to the performance of her division.
Incorrect, Carly Fiorina was hired externally, from some (old) AT&T division, to be the CEO. She never managed any HP division,
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Carly destroyed Lucent before she destroyed HP.
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That's the thing. Welch isn't paying for it at all, but GE is. Even if Welch was still living, he wouldn't be paying for it due to his golden parachute.
"Pruning" the bottom 20% of your engineers (Score:2)
I thought GE pioneered "the beatings will continue until morale improves" policy of firing the bottom 20% on performance reviews of their tech workforce.
I told SpaceX does a a similar thing?
GE should have been an unassailable technology leader?
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Another thing that happened around that time is that GE offloaded the failing nuclear power business into a private firm with Hitachi.
Like most old companies, GE is caving under legacy real estate and employees that kill profits. If this separates some of that legacy bloat, it will be good for the bits that survive.
Oh no.. (Score:2)
So anyway.
Killed themselves by buying everything (Score:3)
GE was at one time a brilliant, can't lose investment. They had a ton of money. Then a new CEO came along and decided the best thing he could do with all the cash was to buy EVERYTHING. He went looking for anything he could buy and over-paid for a ton of junk.
Finally they are doing the exact opposite, selling off businesses and letting them survive on their own instead of being in a huge conglomerate that had little to no reason to be one company.
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GE was at one time a brilliant, can't lose investment. They had a ton of money. Then a new CEO came along and decided the best thing he could do with all the cash was to buy EVERYTHING. He went looking for anything he could buy and over-paid for a ton of junk.
Finally they are doing the exact opposite, selling off businesses and letting them survive on their own instead of being in a huge conglomerate that had little to no reason to be one company.
I've seen too much of GE taking a product, making as much profit off it they could, and firing anyone that knew anything about it, rather than improving on the technology to something new and using the knowledge of the people who developed the original.
I worked as a consultant for GE back in the 2000's (Score:3)
I worked as a consultant for GE as an IT Consultant. Compared to the other customers I have worked for, GE didn't seem to have any company sole. While the people were nice enough, none of them seemed overly motivated, and preferred to keep the status quo, spend most of their time trying to cut costs, vs build a better product, or find a better workflow. Successes are to be treated as a minor improvement, Failures are deeply punished. With everyone job on the line it was about playing it safe.
I expect that the higher ups were seeing bad numbers, and figure the other units are the ones bringing them down, and if they can do it their own way they will be able to succeed.
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Not ending conglomerate, now 3 (Score:3)
Each of the three spinoffs of GE will be a conglomerate in its own right. They'll just be more focused on a particular theme.
Before the split, GE was made up of about 20,000 separate companies. https://en.wikipedia.org/wiki/... [wikipedia.org] I'd say that roughly 7,000 companies for each of the three, still constitutes a conglomerate.
"Ending Conglomerate for Good?" (Score:2)
What is that supposed to mean?
It's a conglomerate. They split. They buy. They split again.
GE has been doing this since the 1980's.
Ending it for good? What?
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Investment grade (Score:2)
What the hell is investment grade? It needs money? What if car companies made repair grade cars?
GE CR&D (Score:1)
Jack Welch also gutted GE Corporate Research & Development, ending most of the tax on the divisions which originally funded it and requiring CR&D to sign contracts with divisions for particular work. Long term R&D went away.
Having worked there for nine years... (Score:1)
horizontal (Score:2)
horizontal integration has turned out to be a loser for your stock price, since no one can figure out what business you're in.
vertical integration is a winner, because you can control your supply chain.