Umair Gaines
General Electric (GE), a company born out of Thomas Edison's race to provide affordable light and electricity to fuel the growth of industrial America, was once a bellwether of blue-chip stocks. The company was formed through the 1892 merger of Edison General Electric Company and Thomson-Houston Electric Company. GE was a longtime dividend aristocrat, a company with a long history of maintaining dividend payments to shareholders. However, in recent years, the company has struggled, with its stock falling 45% in 2017.
| Characteristics | Values |
|---|---|
| Date of Incorporation | 24 April 1889 |
| Location of Incorporation | New York |
| Companies Merged to Form Edison General Electric Company | Edison Lamp Company, Edison Machine Works, Bergmann & Company, Edison Electric Light Company, Sprague Electric Railway & Motor Company |
| Year Merged with Thomson-Houston Electric Company to Form General Electric | 1892 |
| Original Plants Still Operating | Yes |
| Part of Dow Jones Industrial Average | 1896-2018 |
| Market Capitalization in August 2000 | $601 billion |
| Dividend Cuts | 2009, 2010, 2017, 2018 |
| Job Cuts | 2017 |
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What You'll Learn
General Electric's history on the stock market
General Electric (GE) has a long history on the stock market. The company was formed through the 1892 merger of Edison General Electric Company and Thomson-Houston Electric Company. GE was born out of the race to provide affordable light and electricity to fuel the growth of industrial America. It quickly became a household name, producing incandescent light bulbs, electric locomotives, X-ray machines, and electric stoves.
In 1896, GE was one of the original 12 companies listed on the newly formed Dow Jones Industrial Average, where it remained for 122 years, though not continuously. GE stock was one of the 30 components of the Dow Jones Industrial Average from 1907 to 2018, the longest continuous presence of any company on the index. During this time, it was the only company that was part of the original Dow Jones Industrial Index created in 1896.
In August 2000, GE had a market capitalization of $601 billion and was the most valuable company in the world. However, in recent years, the company has struggled, and its profitability has flagged. In 2009, the company slashed its yearly dividend, and dividends fell even further in 2010. In 2017, GE announced it would cut 12,000 jobs, and the stock fell 45% over the year. On June 26, 2018, the stock was removed from the Dow Jones Industrial Index and replaced with Walgreens Boots Alliance. In December 2018, the company cut its quarterly dividend to 1 cent per share.
In 2023, GE split into three separate companies: GE HealthCare, an independent healthcare company; GE Aerospace, an aerospace company; and GE Vernova, an energy company. Following these transactions, GE Aerospace took the General Electric name and ticker symbols, while the old General Electric ceased to exist as a conglomerate.
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The formation of Edison General Electric Company
The formation of the Edison General Electric Company was the result of the consolidation of Thomas Edison's various business interests. In 1889, Drexel, Morgan & Co., a company founded by J.P. Morgan and Anthony J. Drexel, financed Edison's research and facilitated the merger of several of his companies under a single corporation. This led to the creation of the Edison General Electric Company, which was incorporated in New York on April 24, 1889. The formation of this company represented a strategic move to streamline Edison's diverse ventures in the electricity and lighting space.
At the time, Edison had stakes in multiple companies operating in the electricity and lighting sector. These included the Edison Lamp Company, a manufacturer of lamps in East Newark, New Jersey, and the Edison Machine Works, which produced dynamos and large electric motors in Schenectady, New York. Another of his ventures was Bergmann & Company, which specialised in electric lighting fixtures, sockets, and other related devices. Edison also had a financial arm, the Edison Electric Light Company, which held the patents for his lighting experiments.
However, the consolidation orchestrated by Drexel, Morgan & Co. did not encompass all of Edison's companies. Notably, the Edison Illuminating Company, later known as Consolidated Edison, was excluded from the merger. This absence underscores the selective nature of the consolidation process, which aimed to consolidate specific business interests under the newly formed Edison General Electric Company entity.
Three years after its formation, in 1892, the Edison General Electric Company underwent another significant transformation. It merged with the Thomson-Houston Electric Company, creating a new entity known as General Electric (GE). This merger was supported once again by Drexel, Morgan & Co., who had played a pivotal role in the initial consolidation of Edison's companies. The formation of GE marked a pivotal moment, as it brought together the strengths and resources of two prominent companies in the electricity and lighting industry.
General Electric quickly rose to prominence, becoming a household name in the late 19th century. The company's earliest products included incandescent light bulbs, electric locomotives, X-ray machines, and electric stoves. GE's impact extended beyond home appliances, as it played a role in military equipment supply during World War II and ventured into aviation with the launch of the J-47 jet engine in 1949. The company's long history and diverse business interests have undoubtedly left a significant mark on the American corporate landscape.
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The merger with Thomson-Houston Electric Company
The merger between the Edison General Electric Company and the Thomson-Houston Electric Company was orchestrated by New York financier J.P. Morgan of Drexel, Morgan & Co. in 1892. The merger brought together Thomas Edison's Edison General Electric Company and Elihu Thomson's Thomson-Houston Electric Company to form General Electric (GE).
The Thomson-Houston Electric Company was founded by Elihu Thomson and Edwin Houston as the American Electric Company in 1880. In 1882, Charles Albert Coffin led a group of investors in buying American Electric, renaming it Thomson-Houston Electric Company, and moving its operations to Lynn, Massachusetts. Under the leadership of Coffin, Edwin Rice, and Elihu Thomson, the company grew into a large enterprise with sales of $10,000,000 and 4,000 employees by 1892.
The Edison General Electric Company, on the other hand, was formed in 1889 through the consolidation of several of Thomas Edison's electricity-related companies, including the Edison Lamp Company, Edison Machine Works, Bergmann & Company, and Edison Electric Light Company. This consolidation was proposed by Henry Villard, an Edison supporter and investor, and financed by Drexel, Morgan & Co.
The merger between these two companies, overseen by a committee that included D.O. Mills, T.J. Coolidge, Hamilton M. Twombly, and Frederick L. Ames, resulted in the creation of GE, with Thomson-Houston's top executive, Charles A. Coffin, becoming GE's first president. The original plants of both predecessor companies continue to operate under the GE banner to this day.
GE quickly became a household name, with its earliest products including incandescent light bulbs, an electric locomotive, X-ray machines, and an electric stove. Over the years, GE diversified into multiple divisions, including aerospace, energy, healthcare, lighting, locomotives, appliances, and finance. The company played a significant role in the development of vacuum tube technology, which enabled the creation of radar tracking systems, and supplied the military with equipment during World War II.
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GE's early products and household name status
General Electric (GE) was formed through the 1892 merger of Edison General Electric Company and Thomson-Houston Electric Company. GE was born out of the race to provide affordable light and electricity to fuel the growth of industrial America. It quickly became a household name, with its earliest products including incandescent light bulbs, an electric locomotive, X-ray machines, and an electric stove. The company began mass-producing electric home appliances in the 1920s and was among those credited for changing the look and function of the American home.
GE's early products were diverse and innovative for their time. They included:
- Incandescent light bulbs
- An electric locomotive
- X-ray machines
- An electric stove
In the decades that followed, GE continued to expand its product offerings and develop new technologies. The company helped create vacuum tube technology, which played a crucial role in the subsequent development of radar tracking systems. During World War II, GE supplied the military with equipment and executives, further solidifying its role as a key player in American industry.
GE's early entry and success in the electricity and lighting industry set the tone for its future as a diversified company with a wide range of products. The company's early focus on innovation and its ability to adapt to the changing needs of the market contributed to its household name status and long-term success.
Today, GE Appliances continues to offer a wide range of innovative products for the home, including kitchen appliances, laundry appliances, and small appliances. The company is committed to accessibility and designs products that meet the requirements of the Americans with Disabilities Act. GE Appliances also invests in research and development, as evidenced by its dedicated team for the recreational living sector and its Air & Water Solutions division, launched in 2022.
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GE's decline and restructuring
General Electric (GE), once a household name, has been struggling in recent years. The company's decline accelerated during the Great Recession, as the financial crisis revealed that it was overstretched. GE's stock fell 45% in 2017, and in November of that year, the company unveiled a broad restructuring plan. This included halving its quarterly dividend from 24 cents to 12 cents per share and cutting thousands of jobs across all divisions. The share price fell 7.2% on the day the restructuring was announced, making it the stock's worst single-day decline since April 2009.
In 2018, GE's 125th anniversary year, the company cut its dividend to 1 cent per share. The company was also dropped from the Dow Jones Industrial Average (DJIA) that year, ending its more-than-100-year run as a component of the index. GE's former CEO, John Flannery, described the GE of the future as a "more focused industrial company" that would leverage its game-changing capabilities. The restructuring plan included a renewed focus on health care, aviation, and energy, as well as addressing overcapacity and simplifying its portfolio.
In 2018, GE's new chair and CEO, GH Lawrence Culp, aggressively reduced the company's debt and divested unwanted stakes and subsidiaries, including its stake in oil field services company Baker Hughes. Both divestitures raised significant capital, and the share price rose 53% in 2019. However, the arrival of the pandemic cut short the rebound in GE's share price. In 2023, GE Healthcare, the best-performing unit, was spun off as an independent company. The power and renewable business were set to merge in a new company in 2024, and the conglomerate was expected to split into three independent companies, focusing on aerospace, energy, and healthcare. Despite GE's well-publicized decline, it remains a force in its three main business sectors, employing hundreds of thousands of people worldwide.
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Frequently asked questions
Yes, Edison General Electric Company was on the stock market. The company was formed in 1889 through the merger of Edison's three electric light manufacturing companies and, in 1892, it merged with Thomson-Houston Electric Company to form General Electric (GE). GE was a publicly traded company on the New York Stock Exchange.
The General Electric logo has a blue circle with a white outline and four white lines that suggest the blades of a mid-century tabletop fan. The centre of the circle contains the letters "GE" and is officially known as the Monogram, but some refer to it as "the meatball".
The earliest products of General Electric were incandescent light bulbs, an electric locomotive, X-ray machines, and an electric stove. The company began mass-producing electric home appliances in the 1920s and was one of the companies that changed the American home.
In 2017, GE's stock fell 45% as the company announced it would cut 12,000 jobs. In November 2017, the company halved its quarterly dividend from 24 cents to 12 cents per share.
In 2024, GE split itself into three companies: GE HealthCare, GE Aerospace, and GE Vernova (energy). This was done to enable each company to focus on its core strengths and growth opportunities.
