General Electric, once a dominant force in American households, has now completed its split into two companies. Founded by Thomas Edison in 1892 and led by renowned CEO Jack Welch, GE struggled in the 21st century due to poorly timed deals and high levels of debt. Despite attempts to support its stock price through share repurchases and dividends, the strategy failed, leading to its removal from the Dow Jones Industrial Average in 2018. Larry Culp was appointed as CEO in 2018 and focused on reducing debt through divestitures and spin-offs.
The divestiture strategy began with the sale of NBC to Comcast in 2013 and the appliance business to Haier in 2016. Under Culp’s leadership, GE sold off its iconic light bulb unit and its aircraft leasing business. GE Capital, which contributed to the company’s decline with lending practices that included subprime mortgages, was also dismantled. In November 2021, GE announced plans to split into three separate companies – GE Healthcare, GE Aerospace, and GE Vernova, with GE Healthcare already trading separately from the other two companies.
Culp’s efforts to cut debt and streamline GE’s operations have had a positive impact on the company’s stock performance. After a sharp decline in 2017 and 2018, GE’s shares nearly doubled in 2023 and continued to rise in the following year. GE Aerospace, one of the newly formed companies, will retain the longtime GE stock symbol, with Culp serving as its CEO. Speculation suggests that Culp may be a potential successor for the retiring CEO of Boeing, another troubled American company, but he has not confirmed any interest in the position.
The split into separate companies marks the conclusion of GE’s transformation from a diversified conglomerate to a more focused industrial business. By shedding non-core assets and reducing debt, GE aims to improve its financial performance and regain investor confidence. The move reflects a strategic shift towards a more sustainable and efficient business model, with each company able to focus on its specific strengths and opportunities in the market. Time will tell if GE’s new structure and leadership will lead to long-term success and growth for the iconic American company.
