Wiktor Wise
General Electric (GE) has had a tumultuous history, rising from one of the first electric companies under Thomas Edison in the late 19th century to a multinational corporation led by Jack Welch. However, GE has also faced challenges, including a well-publicized decline and a $9.5 billion acquisition of Alstom's power business in 2015 that was considered a flop. In 2024, GE split into three independent companies focusing on aviation, healthcare, and energy. Despite these changes, GE remains a significant player in its sectors, employing hundreds of thousands worldwide. GE's stock has recently climbed 6%, with investors anticipating benefits from increased defense spending and infrastructure investment. The company is also relocating production from China and Mexico to the US as part of a $3 billion investment in its US manufacturing plants and distribution network.
| Characteristics | Values |
|---|---|
| Current focus | Aviation, healthcare, and energy |
| GE's share price in November 2024 | Climbed 6% |
| GE's 52-week share price range | High of $194.80 and a low of $92.17 |
| GE's business strategy | Manufacturing close to customers |
| GE's investment | $3 billion |
| GE's appliance production location | United States |
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What You'll Learn
GE's decline and fall from its peak in 2000
General Electric (GE) has been a household name since its founding in the 19th century by Thomas Edison. However, despite its long history and success, GE has faced a well-publicized decline since its peak in 2000.
The turning point for GE came in 2000, the year that Jack Welch retired as CEO. Under Welch's leadership, GE had grown into a diversified multinational company with a market value of $594 billion in 2000, up from less than $15 billion when he started in 1981. Welch's aggressive financial targets and focus on short-term results led to a significant increase in the company's market capitalization. However, critics argue that GE's success during this period was due more to luck and the general economic growth of the time rather than superior management.
Following Welch's retirement, GE's stock price began to slide, and the company has never regained its 2000 peak. The first signs of trouble appeared in the 2000 dot-com bubble, when GE's market cap declined by 24%. The company's woes continued during the 2008 financial crisis, when it received an emergency bailout from Warren Buffett. GE's decline further accelerated during the Great Recession, as the crisis revealed that the company was overstretched.
In the years that followed, GE continued to struggle with poor performance and declining revenues. The company made several costly acquisitions, such as the $9.5 billion purchase of Alstom's power business in 2015, which was considered a flop. GE also began divesting itself of various businesses, selling off NBCUniversal, GE Plastics, GE Water, and GE Appliances. The company's stock price fell, and it lost its AAA credit rating.
In 2018, GE was dropped from the Dow Jones Industrial Average (DJIA) after more than a century as a component of the index. This move confirmed the company's diminished status. Finally, in 2024, GE split into three independent companies, each focusing on a particular industry: aerospace, energy, and healthcare. Despite its decline, GE remains a significant player in these sectors, employing hundreds of thousands of people worldwide.
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GE's $9.5 billion acquisition of Alstom's power business in 2015
In 2014, GE offered $13.5 billion to acquire Alstom's Thermal, Renewables, and Grid businesses, which consisted of $9.9 billion in enterprise value and $3.4 billion in net cash. This amounted to a total of $16.9 billion. The Alstom board of directors received GE's offer positively, and the deal was expected to be completed by June 2, 2014, following regulatory approval.
On November 2, 2015, GE announced that it had completed the acquisition of Alstom's power and grid businesses for €12.35 billion ($13.5 billion), making it GE's largest-ever industrial acquisition. The purchase price was adjusted to €9.7 billion (approximately $10.6 billion or $9.5 billion) after taking into account joint ventures, changes in deal structure, price adjustments, and net cash at close.
GE expected the acquisition to generate earnings per share of $0.05-0.08 in 2016 and $0.15-0.20 by 2018. The company also targeted $3.0 billion in cost synergies in year five. Jeff Immelt, GE's chairman and CEO at the time, stated that the acquisition was a strategic transaction that aligned with GE's portfolio strategy. He highlighted the complementary nature of Alstom's businesses in technology, operations, and geography, expecting a collaborative integration that would yield efficiencies and provide benefits to customers.
However, GE's purchase of Alstom's power business was later considered a "flop" by some, including GE CEO John L. Flannery, who acknowledged that they would have paid a lower price if given the chance to go back in time. Despite this, GE remains a significant force in its three main business sectors, employing hundreds of thousands of people worldwide.
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GE's removal from the Dow Jones Industrial Average in 2018
General Electric (GE) was removed from the Dow Jones Industrial Average (DJIA) in June 2018, ending its more-than-100-year run as a component of the index. GE was the last remaining original component of the DJIA, which was introduced in 1896 and initially included only 12 companies, primarily in the industrial sector.
GE's removal reflected a broader shift in the economic composition of the United States, which had moved away from heavy industry towards services, technology, finance, and healthcare. GE itself had undergone significant changes, losing billions of dollars in market value and struggling with weak demand for industrial equipment and cash flow challenges.
The decision to remove GE from the DJIA was a blow to the company, which had already been facing difficulties. In the same year, GE cut its dividend for only the second time since the Great Depression and set aside $15 billion to pay for obligations held by GE Capital, its financial services unit.
Despite its troubles, GE remains a significant force in its three main business sectors: aerospace, energy, and healthcare. The company's shares have climbed in recent months, with investors anticipating benefits from increased defense spending and infrastructure investment.
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GE's stock price climb of 6% in November 2024
In November 2024, General Electric (GE) shares climbed by 6%. This rise in GE's stock price can be attributed to various factors and strategic decisions made by the company.
Firstly, GE's decision to split into three independent companies in April 2024 is a significant factor. The company separated into three distinct entities focusing on specific industries: GE HealthCare, GE Aerospace, and GE Vernova (energy). This strategic shift allowed each company to concentrate on its core strengths and markets. The aviation business, for instance, provides jet engines and related services to major aircraft manufacturers, while the healthcare sector focuses on medical equipment. This move towards specialization may have been well-received by investors, contributing to the stock price increase.
Secondly, the 6% climb in GE's stock price can be attributed to investor anticipation of benefits from Donald Trump's proposed policies. Following Trump's presidential election win, investors foresaw potential policy changes that could positively impact GE's diverse portfolio. Trump's focus on infrastructure investment, including modernizing transportation, energy, and digital networks, aligns with GE's capabilities. His proposed substantial infrastructure spending plans, targeting upgrades to roads, bridges, and electrical grids, could increase demand for GE's power generation, renewable energy technologies, and industrial automation solutions.
Additionally, Trump's stance on reducing regulatory hurdles in the manufacturing and energy sectors may also ease operational challenges for GE, making it easier for the company to conduct business and potentially increasing its profitability.
It is worth noting that GE has a long history dating back to the late 19th century, when it emerged from the race to provide affordable light and electricity to fuel industrial America. GE has been a household name for over a century and has contributed significantly to technological advancements, such as vacuum tube technology and radar tracking systems.
While GE's stock price climbed 6% in November 2024, it is important to consider the broader context of the company's performance and the market conditions at the time. This includes analyzing the performance of GE's stock over the preceding and subsequent years to identify any trends or patterns that may influence investor behaviour and the company's overall financial health.
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GE's $3 billion investment in US manufacturing plants and distribution networks
General Electric (GE) has been through a well-publicized decline, but it remains a force in its three main business sectors, employing hundreds of thousands of people worldwide. In 2024, the company split into three distinct entities, each focusing on aerospace, energy, and healthcare.
GE Appliances, a subsidiary of GE, announced a $3 billion investment in its US manufacturing plants and distribution networks in August 2025. This investment is in addition to the $3.5 billion invested since 2016, bringing the total to $6.5 billion. The $3 billion investment is expected to be spent over five years, with the goal of expanding US operations and the workforce following the Trump administration's tariff policies, which aimed to boost domestic manufacturing.
GE Appliances plans to create 1,000 new jobs across Kentucky, Alabama, Georgia, Tennessee, and South Carolina facilities as part of this expansion. The investment will also support the company's air conditioning and water heating portfolio expansion and increase production across all product lines. The company will modernize its 11 US manufacturing plants with new automation and capital equipment, making it better equipped to meet the urgent needs for clean water and laundry services during disaster response.
The investment is the second-largest in the company's history and is expected to have a significant impact on the US economy. GE Appliances contributes more than $30 billion annually to the US GDP and supports more than 113,000 jobs directly and indirectly. The investment will further strengthen regional economies and expand the company's domestic supplier base.
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Frequently asked questions
General Electric is a multinational conglomerate that has been a force in the aviation, healthcare, and energy sectors.
GE has been on a decline since its peak in 2000. In 2015, the company made a $9.5 billion acquisition of French transportation company Alstom’s power business, which was considered a flop. In 2018, it ended its century-old run as a component of the Dow Jones Industrial Average.
In 2024, GE split into three independent companies, each focusing on one of its main sectors: GE Aerospace, GE Vernova, and GE Healthcare.
GE Aerospace is an independent, investment-grade public company that focuses on the aviation sector.
GE Vernova is a global leader in driving electrification and decarbonization. It is also an independent public company that spun off in April 2024.
