Corporate giant General Electric has announced that it is breaking up into three separate companies. The company has gone through a rough 21st century so far and hopes to revive its stock market performance by announcing that it is splitting into companies focused on aviation, healthcare, and energy. The first of the spinoffs is meant to begin in 2023, with the next two following early in 2024 if all goes according to plan.
Company splitting into three
CEO Larry Culp, who took over the struggling corporation in 2018, has worked extensively to pay off debt and cut costs by selling assets and restructuring.
Culp explained that he felt that the company has made good progress over the last three years but that the goals he has been working towards will be best served by dividing up the corporation.
The idea is that splitting GE into three will allow each of the new companies to gain in efficiency by specializing and focusing on a specific area.
There will be major logistical hurdles to overcome and the split will be expensive but the move thus far appears to be receiving the kinds of reactions which GE had been hoping for.
Culp and others at GE apparently felt that the corporation had become bloated and inefficient, leading to the poor stock market performance it’s suffered in recent years.
The news has been optimistically received by some Wall Street analysts, who agree that a split is likely to encourage greater efficiency and specialization.
Decline of a household name
This will be the end of a conglomerate which has been a household name in America for more than a century, dating back to its founding by Thomas Edison in 1892.
GE had its ups and downs over the course of the 20th century. It saw a major revival in the 1980s, when the company diversified into a number of new fields and was considered “too big to fail.”
Last year General Electric under Larry Culp even did away with its light bulb manufacturing, ending a 129 year old tradition in American industry.
The light bulb production was sold off to pay for debt accumulated by the corporation. GE branded bulbs are still being produced, but not by GE itself.
The value of GE stock climbed with the announcement of the split so Culp has at the very least achieved his aim of making people optimistic about the sluggish corporation again.
Whether or not the expensive and time consuming process of dividing GE into three will have been worth the effort will take much longer to become known.