Beatrice Lang
General Electric (GE) is an American multinational conglomerate founded in 1892. Over the years, the company has had multiple divisions, including aerospace, energy, healthcare, lighting, locomotives, appliances, and finance. In 2008, GE was severely affected by the financial crisis, which led to a series of events that damaged its reputation and stock price. The company began selling off various divisions and assets, and in 2024, GE was broken up into three separate public companies: GE Aerospace, GE HealthCare, and GE Vernova. The economy has impacted GE's financial performance, with a slumping US economy and credit crunch weighing on its financial, industrial, and healthcare units. Restrictions on air travel during the COVID-19 pandemic also caused a significant decline in revenue for GE.
| Characteristics | Values |
|---|---|
| Company divisions | Aerospace, energy, healthcare, lighting, locomotives, appliances, finance |
| Revenue | $146,000,000,000 in a single year |
| Ranking | 33rd largest firm in the US by gross revenue (2020); 64th in Forbes Global 2000 (2023) |
| Profitability | Ranked 14th most profitable company in 2011; underperformed the market by 75% |
| Employment | Cut 12,000 jobs in 2017 |
| Dividends | Slashed yearly dividend from $1.24 to $0.82 per share in 2009 |
| Debt | Aggressively reduced by Larry Culp |
| Emissions | 2,080 Kt of CO2e emissions in 2020, a 13% decrease year-on-year |
| Environmental Impact | Implicated in large-scale air and water pollution, and the creation of toxic waste |
| Brand Recognition | 4th most recognized brand globally in 2007 |
| Impact of Economic Downturns | Affected by the Great Recession in the late 2000s and the 2008 financial crisis |
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What You'll Learn
GE's response to economic downturns
General Electric (GE) has had a tumultuous history, with its response to economic downturns being a key factor in its evolution as a company. The company was founded in 1892 and grew to become a household name, with its products ranging from light bulbs to aircraft engines. However, GE has also faced significant challenges, particularly during economic downturns, which have led to a series of strategic shifts and restructurings.
During the 2008 financial crisis, GE found itself in a precarious situation. The company's reliance on its financial arm, GE Capital, left it vulnerable as the economy took a turn for the worse. As a result, GE was forced to seek a bailout and began a process of diversification away from financial services. This included the sale of NBC Universal and the acquisition of a power business from the French company Alstom. Despite these efforts, GE's profitability continued to suffer, and it severely underperformed the market by about 75%.
In 2017, GE announced a broad restructuring, which included job cuts and halving its quarterly dividend. The company also began to sell off various divisions and assets, such as its appliances and financial capital divisions, under Jeff Immelt's leadership. This was followed by further divestments under John Flannery, who replaced Immelt in 2017. Flannery focused on streamlining the company by selling off the locomotives and lighting divisions to concentrate more on aviation.
In 2020, the COVID-19 pandemic caused another significant downturn for GE, with restrictions on air travel leading to a substantial drop in revenue. This ultimately led to the decision to break up the conglomerate into three separate public companies by 2024: GE Aerospace, GE HealthCare, and GE Vernova (energy). This move was intended to allow each company to focus on its core strengths and growth opportunities.
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The impact of the 2008 financial crisis
The 2008 financial crisis had a significant impact on General Electric (GE). The crisis revealed that GE was overstretched, and the company began to struggle financially.
In the lead-up to the crisis, GE had made several acquisitions, including the purchase of Vivendi Universal Entertainment, the parent company of Universal Pictures, in 2004. GE also completed the spin-off of most of its mortgage and life insurance assets into an independent company, Genworth Financial, in the same year. In 2005, GE announced the launch of a program called "Ecomagination", investing $1.4 billion in clean technology research and development by 2008. By October 2008, 70 green products had been brought to market through this initiative.
However, the financial crisis that hit in 2008 took a toll on GE's finances and operations. The company was forced to auction off its appliances business, a plan that fell through due to the recession. GE also began selling off various divisions and assets, including its appliances and financial capital divisions, under Jeff Immelt's leadership as CEO. In 2009, GE slashed its yearly dividend from $1.24 to $0.82 per share, and dividends fell even further in 2010. The company's profitability collapsed, and it severely underperformed the market by about 75%.
Despite these challenges, GE received a substantial investment from Warren Buffett in 2008 to stabilize its operations. The company reduced the size of GE Capital and returned to its roots in manufacturing. GE also divested billions of dollars in loans and real estate while selling off several businesses, including NBCUniversal, GE Plastics, GE Water, and GE Appliances.
In summary, the 2008 financial crisis exposed GE's financial vulnerabilities and led to a period of restructuring and cost-cutting measures. The company struggled to recover its financial footing in the years following the crisis, ultimately leading to its decline in the early 2020s and its split into multiple independent companies.
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GE's environmental impact and fines
General Electric (GE) has had a significant impact on the environment, with some of its activities resulting in large-scale air and water pollution. In 2000, researchers at the Political Economy Research Institute identified GE as the fourth-largest corporate producer of air pollution in the United States. The company was responsible for releasing over 4.4 million pounds per year (2,000 tons) of toxic chemicals into the air and has also been implicated in the creation of toxic waste.
GE's environmental impact has not gone unnoticed, and the company has faced scrutiny and fines for its actions. In 2025, the company agreed to pay a $2.25 million civil penalty for violating federal and state environmental laws in Waterford, New York. GE was found to have overridden the automatic waste feed cut-off system of a hazardous waste incinerator, leading to excessive levels of carbon monoxide and other harmful pollutants. This incident exposed the public and the environment to dangerous air pollutants and resulted in legal action taken by the Environmental Protection Agency (EPA) and other regulatory bodies.
GE's environmental record has been a significant concern, with the company once regarded as one of the most notorious polluters in American corporate history. However, GE has also recognized the importance of addressing environmental issues and has made notable efforts toward a ''green reinvention." In 2005, GE's CEO at the time, Jeff Immelt, announced the Ecomagination initiative, committing significant resources to energy efficiency and ecologically friendly products. This initiative has proven successful, generating $200 billion and driving the company's future direction.
GE's Ecomagination initiative has fostered partnerships with various companies to address industry-wide global challenges. The company has collaborated with Intel, Walmart, Total, and even a mining company, to lower emissions and create renewable and hybrid clean energy systems. GE has also worked on lowering the environmental impact of fracking with natural gas companies. These efforts reflect a shift in consumer priorities, with GE customers increasingly concerned about the environmental impact and resource savings of their purchases.
While GE's environmental impact and fines have been significant, the company has also demonstrated a commitment to mitigating its environmental footprint and contributing to global sustainability efforts. The success of the Ecomagination initiative and GE's collaborations with other companies indicate a recognition of the importance of environmental stewardship in the corporate world.
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GE's restructuring and divestments
General Electric (GE) has undergone significant restructuring and divestments in recent years, moving away from its roots as one of the first electric companies under Thomas Edison in the late 19th century. GE was once a sprawling conglomerate with interests in various sectors, including financial services, insurance, healthcare, aeronautical engines, oilfield services, and locomotive manufacturing. However, the company has faced challenges in recent years, including a decline in profitability, high levels of debt, and the impact of the COVID-19 pandemic on its revenue.
Under former CEO Jeff Immelt, GE began selling off various divisions and assets following the Great Recession of the late 2000s. This included divesting billions of dollars in loans and real estate, as well as selling off NBCUniversal, GE Plastics, GE Water, and GE Appliances. Immelt stepped down in 2017, and his replacement, John Flannery, continued the process of restructuring and divestment. Flannery pushed for mass divestitures in locomotive manufacturing, distributed power, and entertainment units. He aimed to slim down GE to focus on aviation and power.
In 2018, GE announced its plan to spin off its healthcare business and divest its stake in the oil-services firm Baker Hughes. This marked a significant break from its past as a conglomerate, and the company hoped it would reward shareholders who had seen the stock lose value over the years. GE also reduced its interest in Baker Hughes from 62.5% to 50.4% in 2018, resulting in a $2.1 billion loss.
The final CEO of GE, Larry Culp, announced in November 2021 that the company would be broken up into three separate, public companies by 2024: GE Aerospace, GE HealthCare, and GE Vernova (energy). Culp continued the focus on reducing debt and divesting unwanted stakes and subsidiaries, including the transportation unit. The 2018 divestments alone accounted for 30% of group revenue, and with $20 billion of assets already sold or earmarked, cash is coming in and debt is reducing. However, analysts question whether the lack of diversification will set GE up for further woes, and how attractive a business focusing on aviation and power will be to investors.
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GE's revenue and profit trends
General Electric (GE) has had a tumultuous history in terms of revenue and profit trends, experiencing both soaring success and significant setbacks over the years.
In 2007, GE was ranked as the fourth most recognised brand in the world by BusinessWeek magazine, surpassing notable names such as Nokia, McDonald's, and Citi. However, the company faced challenges in the late 2000s during the Great Recession, prompting GE to sell off various divisions and assets, including its appliances and financial capital divisions, under then-CEO Jeff Immelt. This period also saw a decline in dividends, with Immelt stepping down in 2017.
In 2018, GE ended its century-long run as a component of the Dow Jones Industrial Average, signalling a decrease in its prominence. The company's profitability continued to flag, and it embarked on a broad restructuring process, reducing its quarterly dividend and laying off thousands of employees across all divisions.
GE's revenue took a significant hit in 2020 due to restrictions on air travel during the COVID-19 pandemic. This ultimately led to the decision to break up the company into three separate public companies by 2024: GE Aerospace, GE HealthCare, and GE Vernova (energy).
Despite these setbacks, GE has demonstrated resilience and a commitment to refocusing its operations. In 2020, it ranked 33rd among the Fortune 500 as the largest firm in the United States by gross revenue. The company's revenue streams are diverse, with segments including Power & Water, Oil & Gas, Energy Management, Aviation, Healthcare, Transportation, Appliances & Lighting, and GE Capital. GE Capital, in particular, has contributed significantly to the company's revenues, providing financial services and products globally.
In conclusion, GE's revenue and profit trends have been characterised by periods of growth and decline, influenced by economic downturns, strategic shifts, and the diverse nature of its business segments. The company's decision to split into separate entities may enable a sharper focus on core strengths and growth opportunities within each industry.
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Frequently asked questions
The 2008 financial crisis led to General Electric's bailout and the sale of NBC Universal, the dissolution of GE Capital, and the loss of investor confidence.
Restrictions on air travel during the COVID-19 pandemic caused General Electric's revenue to fall significantly in 2020.
Following the Great Recession of the late 2000s, General Electric began selling off various divisions and assets, including its appliances and financial capital divisions.
