I was traveling in mid-July, and only now am getting to the older issues of the Wall Street Journal that are piled on the floor of my living room.
So almost a month after the announcement, I just read that GE is planning to spin off its Consumer & Industrial businesses to shareholders.
These are the original core businesses of GE- electrical-related products such as motors, light bulbs, and appliances.
On one hand, I will take credit for noting the need for this about two years ago. On the other hand, it's not really sufficient to affect GE tremendously.
The Wall Street Journal reproduced a GE chart showing that these businesses account for only 8% of the conglomerate's sales. And quoted data showing a 30% decline in the company's share price under Immelt's nearly-seven year reign of shame, incompetence and arrogance.
The entertainment, jet engine, financial services and infrastructure businesses still remain, unrelated though they are to each other.
By trying to sell the credit card portfolio business, selling or spinning off appliances, and spinning off the other electrical businesses, Immelt gives the impression that he is answering calls to split the company apart.
But he's really just nibbling around the edges.
I don't think Immelt will go after the big stuff- jet engines and entertainment- because spinning those off will cause even the dimmest analysts and shareholders to see that the corporate overhead attendant to Immelt's job will then be unnecessary. And the last remnants of GE will finally dissemble into separate businesses.
But I do think this is going to begin a trend, if only a subtle one, that results in Immelt being the last CEO of the diversified GE that we know today.
For shareholders' sakes, let's hope so.
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2 comments:
GE has been a strategic portfolio company since the mid-1970s and has continually been taking itself apart... Read the entire GE Story in my book: The Secret to GE's Success...
Bill Rothschild
Dear Bill-
In some antideluvian time long ago I read one of your early books about strategy. I recall your having a GE pedigree. You probably worked for my old mentor and boss at Chase, Gerry Weiss.
Now, however, you seem to have lost your mental acuity.
To call GE a 'success' with its record under the inept Immelt is to basically brand yourself as also incompetent.
The reasons for GE's 'strategic portfolio "success"' through the early Welch era were, as I have written in prior GE-related posts, a function of less-efficient capital markets.
GE's time as a company which is capable of delivering consistently superior total returns to its shareholders has ended.
Period.
Nobody should care to read your book about GE's history, because that era is over.
-CN
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