From turbines to TV, from household appliances to power plants, General Electric (GE) is plugged in to businesses that have shaped the modern world. The company produces -- take a deep breath -- aircraft engines, locomotives and other transportation equipment, kitchen and laundry appliances, lighting, electric distribution and control equipment, generators and turbines, and medical imaging equipment. GE is also one of the US's pre-eminent financial services providers: GE Capital, comprising commercial finance, commercial aircraft leasing, real estate, and energy financial services, is its largest segment. GE's other segments include Aviation, Home & Business Solutions, and Transportation, among others.
GE's vast operations are located in Africa, Asia, Australia, Europe, North America, South America, Latin America, and the Middle East. It serves customers in more than 100 countries and generates more the half of its revenue from international markets.
Although financial services is GE's biggest segment, the company's raison d'etre has traditionally been its industrial products. In response to changes in the economic markets, the company has shuffled its organizational structure several times as of late. It now divides its operations across eight segments: GE Capital, Healthcare, Aviation, Power & Water, Oil & Gas, Home & Business Solutions, Energy Management, and Transportation.
In 2013 GE sold its 49% stake in NBCUniversal for nearly $17 billion to Comcast as part of its strategy to focus on its industrial operations. There was already a structure in place for Comcast to eventually take full ownership of NBCUniversal, but stronger than expected growth from the joint venture accelerated those plans.
After experiencing steady revenue declines for three straight years, GE saw its revenues remain static in 2011 and 2012, hovering around the $147 billion mark. Its profits, however, dipped by 4% from $14.2 billion in 2011 to $13.6 billion to 2012.
Revenue from Europe was down by roughly 6% in 2012 as GE Capital's revenues fell by 6%. GE did, however, experience growth in all its other segments, especially Energy Management and Transportation (a 15% surge in sales for each). It attributes growth in these segments to an increase in US locomotive sales and higher demand in the mining equipment sector.
The company's erosion of profits for 2012 was due to losses from discontinued operations.
Mergers and Acquisitions
To boost its global reach, GE's financial arm bought a $2.3 billion portfolio of commercial real estate loans in 2013 from Deutsche Postbank AG that comprises 90% British, as well as German and French, properties.
For the most part, GE has tried to reduce its reliance on its riskier financial businesses and make further investments in its other segments. In aviation, the company made a large deal in late 2012 with the $4.3 billion purchase of the aviation propulsion components and systems business of Italy's Avio S.p.A. The move expanded GE's activities in the appealing jet propulsion segment and strengthens its global supply chain.
To enhance its energy segment, it spent $3.2 billion in 2011 to acquire France-based Converteam, a maker of automation and electrification equipment. To complement that acquisition, GE announced it will build a solar panel factory in the US. The plant (the largest in the country) will make enough panels to power 80,000 homes every year. It is part of GE's plan to invest more than $600 million in its solar energy segment.
GE also in 2011 swallowed up industrial equipment manufacturer Dresser for about $3 billion; it was later folded into GE's Energy Services and Power & Water business units. GE bought Lineage Power, which makes power converters for computer data centers, for some $520 million, as well as waste-heat recovery systems maker Calnetix Power Solutions. The company acquired UK-based pipeline products manufacturer Wellstream for approximately $1.3 billion and then bought frame technology from Wind Tower Systems, which it will use to build taller wind turbine towers that can accommodate longer blades.
It's also boosting its healthcare segment and strengthening its software, data, and analytics business by buying Wisconsin-based API Healthcare, a healthcare workforce management software and analytics expert.
CEO Jeff Immelt is obviously not shy about making sweeping changes, whether by divesting underperforming segments or investing in probable growth industries. He has emerged from the considerable shadow of his predecessor, Jack Welch, by diverging somewhat from Welch's slavish obsession with the bottom line and encouraging managers to innovate and take more risks. As a result, GE has been growing in such areas as biotech, renewable energy, nanotechnology, and digital technology. Immelt has taken a page from his former boss' playbook by pursuing growth outside the US, particularly in emerging markets like India, China, Eastern Europe, Africa, and the Middle East.
GE hopes to double its oil and gas revenues by 2015 and plans to continue making investments to grow the business. In line with that strategy, GE in 2013 acquired Texas-based Lufkin Industries, which specializes in providing artificial lift technologies for the oil and gas industry as well as making industrial gears. The $3.3 billion deal broadened the GE Oil & Gas unit and supports the company's plans to tighten its focus on industrial customers by providing services and equipment.
Another growth area for GE is mining. In 2012 the company acquired underground mining equipment manufacturers, Industrea Limited and Fairchild International. Both companies are positioned for growth in China, Australia, and the US. It also created a new business unit that year: Australia-based GE Mining.