General Electric‘s removal from the Dow Jones Industrial Average in June 2018 marked a dramatic conclusion to an original participant’s multi-decade decline. Since GE was sidelined from the exclusive index, a lot has happened — but a lot more is still left to be accomplished to undo decades of mishaps.
The company’s new CEO, Larry Culp, hopes to right the wrongs of GE’s past, present, and future. However, its wrongs have turned into a mountain of debt. GE has been selling assets to cover it, but Culp and company have a new pitch for investors: splitting up GE.
The one-time industrial giant will be broken up into three companies: one for aviation, another for healthcare, and the final for its power business. ✈️ ⚕️ ⚡ The three companies will be separate, publicly-traded companies. According to Culp, “this is the best way to fully realize the potential of these businesses.”
The changes will take time, though. GE Healthcare, which makes MRIs and hospital equipment, will spin off in 2023. The unit did $17 billion in revenue in 2020. In 2024, it will spin off its power & renewable energy unit — that includes all of its turbines for power plants, wind farms, and other stuff along those lines. That unit did an even more impressive $33 billion in revenue in 2020.
What’s left behind under the original ticker will be a very different $GE than the diversified disaster that exists today. GE will focus on aviation, namely making and servicing jet engines. That business did $22 billion in revenue in 2020, despite the pandemic.
$GE rose 2.7% on the news today, an indication that investors are liking the reorganization. 👍