Umair Gaines
General Electric (GE) has had a long history of innovation, from its earliest products of incandescent light bulbs to its role in creating vacuum tube technology and radar tracking systems. However, in recent years, the company has faced challenges, including the sale of various divisions and assets following the Great Recession. The COVID-19 pandemic also significantly impacted its revenue. As a result, GE announced plans to split into three separate companies by 2024, focusing on aviation, healthcare, and energy. With its rich history and ongoing transformations, what does the future hold for this iconic company?
| Characteristics | Values |
|---|---|
| Number of wind turbines | 55,000 |
| Number of gas turbines | 7,000 |
| Annual revenue | $19 billion |
| Patients served annually | 1 billion+ |
| Installed base equipment | 4 million+ |
| Number of commercial planes | 41,000 |
| Number of defence aircraft | 26,000 |
| Percentage of services as a backlog | 89% |
| Percentage of revenue | 70% |
| Year of separation of GE HealthCare | 2023 |
| Year of GE Aerospace's launch as an independent company | 2024 |
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What You'll Learn
GE's future in aviation, healthcare, and energy
General Electric (GE) has had a rich history, from its beginnings in the late 19th century under Thomas Edison to becoming a household name in the 20th century. However, in recent years, GE has seen a decline in its profitability as a multi-industry conglomerate, leading to its decision to split into three companies: GE HealthCare, GE Aerospace, and GE Vernova (energy).
GE's Future in Aviation
GE Aerospace is actively involved in the aviation industry's efforts to reduce emissions and achieve net-zero carbon emissions by 2050. The company supports the uptake of alternative fuels and industry initiatives for the approval and adoption of Sustainable Aviation Fuel (SAF). In collaboration with Safran, GE Aerospace unveiled the CFM Revolutionary Innovation for Sustainable Engines (RISE) program in 2021, aiming for more than 20% lower fuel consumption and CO2 emissions compared to current engines. GE Aerospace also plans to develop and mature new technologies for future engines, including Open Fan engine architecture.
GE's Future in Healthcare
GE HealthCare provides digital infrastructure, data analytics, and decision-support tools that aid in the diagnosis, treatment, and monitoring of patients. With its expertise in healthcare technology, GE HealthCare is well-positioned to continue developing innovative solutions to improve patient care and support healthcare providers.
GE's Future in Energy
GE Vernova is committed to driving towards a sustainable energy future. The company offers experienced gas turbine fleets in hydrogen and low-BTU fuel operations and continues to invest in research and development in hydrogen and carbon capture technologies. GE Vernova aims to address the "trilemma" of balancing affordability, reliability, and sustainability in the energy industry. By collaborating with partners and global policy experts, GE Vernova is working towards decarbonization and the integration of renewable energy sources, such as wind and solar power.
While GE has faced challenges in recent years, its spinoff into focused companies in healthcare, aviation, and energy sectors shows its commitment to innovation and growth in these key areas. Each company can now leverage its expertise and resources to address industry-specific challenges and pursue new opportunities, contributing to a more sustainable and technologically advanced future.
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The impact of the COVID-19 pandemic on GE's revenue
The COVID-19 pandemic has had a significant impact on General Electric's (GE) revenue and business operations, affecting various divisions and subsidiaries. Here is an overview of the impact on GE's revenue and the company's response:
Aviation Division
The aviation industry was one of the hardest hit by the pandemic, and GE's aviation division faced substantial challenges. The restrictions on air travel and the sharp decline in air passenger traffic significantly reduced the demand for new jet engines and maintenance services for existing engines. This resulted in order cancellations and a decrease in highly profitable services revenue generated by GE's installed base of engines. The company's joint venture with Safran at CFM International, manufacturing engines for Boeing and Airbus, was also affected. The long-awaited wide-body aircraft replacement cycle, expected to be driven by demand for Boeing's 777X, was delayed indefinitely, impacting GE as its GE9X engine is the sole option for the plane.
GE Capital Aviation Services (GECAS)
GECAS, the most valuable part of GE Capital, is a commercial aviation leasing company that faced significant challenges during the pandemic. Their customers, including airlines and aircraft operators, were impacted by the COVID-19 crisis and the subsequent containment measures. The financial stress on airlines increased as the pandemic persisted, and the long-term growth rate of air passenger traffic declined, affecting GECAS's revenue and business outlook.
GE Healthcare
GE Healthcare experienced reduced demand for certain equipment and services as elective procedures were postponed or canceled worldwide due to the pandemic. This division faced a decrease in revenue and had to adapt to the changing healthcare landscape.
GE Power
GE Power's revenue from gas turbine services was at risk of declining due to reduced economic activity and fewer power outages than expected. A weak power-demand environment could lead to a decrease in the frequency of outages, impacting their revenue stream.
Renewable Energy Division
While the COVID-19 pandemic had a limited direct impact on GE's renewable energy division, the company still faced challenges. Supply chain disruptions occurred in Europe, and the division reported a net loss despite an increase in sales revenues. GE announced cost-cutting measures and restructuring efforts to address these challenges.
Overall Impact and Response
The COVID-19 pandemic affected GE's revenue and prompted the company to focus on restructuring and cost-cutting measures. The immediate mission, as described by CEO Lawrence Culp, was to protect the corporation from the pandemic's impact, including supply chain disruptions and reduced demand. GE's stock was down about 35% in 2020, and investors were cautious about the company's near- and medium-term risks. The sale of its BioPharma division to Danaher Corp. for $17 billion provided some relief, but the overall impact of the pandemic on GE's revenue was significant, leading to the eventual breakup of the company into three separate entities: GE Aerospace, GE HealthCare, and GE Vernova.
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GE's computer manufacturing and timesharing operations
General Electric (GE) was one of the eight major computer companies of the 1960s. GE had a line of general-purpose and special-purpose computers, including the GE 200, GE 400, and GE 600 series general-purpose computers, the GE/PAC 4000 series real-time process control computers, and the DATANET-30 and Datanet 355 message switching computers.
GE got into computer manufacturing because, in the 1950s, they were the largest user of computers outside the US federal government, aside from being the first business in the world to own a computer. Its major appliance manufacturing plant, "Appliance Park", was the first non-governmental site to host one. However, in 1970, GE sold its computer division to Honeywell, exiting the computer manufacturing industry, though it retained its timesharing operations for some years afterward.
GE was a big provider of computer timesharing services through General Electric Information Services (GEIS, now GXS), offering online computing services that included GEnie. In 2000, when United Technologies Corp. planned to buy Honeywell, GE made a counter-offer that was approved by Honeywell. On July 3, 2001, the European Union issued a statement prohibiting the proposed acquisition by General Electric Co.
In 2024, GE split itself into three companies: GE HealthCare, GE Aerospace, and GE Vernova (energy). GE Aerospace, the aerospace company, is GE's legal successor. GE HealthCare, the health technology company, was spun off from GE in 2023. GE Vernova, the energy company, was founded when GE finalized the split.
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GE's acquisition of RCA and NBC
General Electric (GE) has had a long history of innovation and success, from its beginnings in the late 19th century as one of the first electric companies under Thomas Edison to its more recent ventures in aviation, healthcare, and energy. In the 1980s, GE made a significant move by acquiring the Radio Corporation of America (RCA) and, with it, the National Broadcasting Company (NBC) television network.
The acquisition of RCA and NBC by GE in the early 1980s caused a stir, particularly due to the fact that RCA/NBC had a formidable news organisation that influenced public opinion. GE was interested in RCA for its defence-related businesses and solid domestic sales of consumer goods, an area where GE wanted to improve its position. The "jewel in the crown", however, was the NBC television network, which had gone from a slump to becoming the most successful of the nation's three networks. GE saw the potential for synergy between its own brand and that of NBC, and the acquisition created the largest non-oil company merger in world business history, with a value of $6.28 billion.
The deal also included the acquisition of several NBC radio stations, which GE was required to sell within 18 months due to Federal Communications Commission (FCC) regulations prohibiting a single owner from controlling television and radio stations in the same markets. Despite the excitement around the acquisition of NBC, GE faced challenges with the news division, which had a history of budget deficits and losses. True to its cost-cutting culture, GE moved to reduce expenses and personnel within the division.
The acquisition of RCA and NBC by GE reflected the company's strategic vision and desire to expand its reach in the media industry. This move built upon GE's history of innovation and diversification, which included ventures into computer manufacturing and timesharing services, as well as its core strengths in aviation, healthcare, and energy. Today, GE continues to adapt and evolve, with a focus on generating ~30% of the world's electricity through its ~55,000 wind turbines and ~7,000 gas turbines, and serving over 1 billion patients annually through its healthcare technologies.
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GE's wind and gas turbines
GE's wind turbines have helped catapult sustainability to the top of the agenda. With over 55,000 wind turbines, GE has reached milestones in wind energy, including its 10,000th turbine in 2008, 15,000th in 2011, 20,000th in 2012, and 25,000th in 2018. These wind turbines generate the energy needed to charge 25 billion smartphones or power 28 million European households for a year. GE's space frame tower, a five-legged enclosed lattice tower stretching up to 139 meters, makes wind turbine construction more cost-effective and allows access to previously inaccessible locations. GE's Wind PowerUp services can increase wind turbine production by up to 5%, taking environmental and site conditions into account. The company's AI/ML tool uses a digital twin of the wind turbine logistics process to accurately predict and streamline logistics costs, potentially saving the wind industry billions by 2030.
GE's gas turbines are also a significant portion of GE Power's revenue and the power generation fleet of several utility companies worldwide. GE Vernova, the energy company founded in GE's split, has the industry's most experienced gas turbine fleet in hydrogen and similar low-BTU fuel operations, with over eight million operating hours across more than 100 gas turbines. GE Vernova is working with EnergyAustralia to innovate Australia's first hydrogen and natural gas dual-fuel power plant. GE recognises that gas power, particularly when complemented by renewable energy, can contribute to decarbonisation. Gas turbines can operate on many fuels besides natural gas, and the use of low-carbon fuels like hydrogen, along with carbon capture solutions, can lead to low or near-zero carbon emissions.
Overall, GE's wind and gas turbines are central to the company's present and future, with a focus on renewable energy, sustainability, and decarbonisation.
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Frequently asked questions
In 2021, GE announced its plan to split into three separate public companies by 2024: GE Aerospace, GE HealthCare, and GE Vernova. GE Aerospace is an aerospace company, GE HealthCare is a health technology company, and GE Vernova is an energy company.
GE Aerospace is the legal successor of General Electric. It is an independent, investment-grade public company that was launched in 2024.
GE HealthCare was spun off from GE in 2023 and is now an independent company.
GE Vernova, a global leader in electrification and decarbonization, spun off in April 2024.
GE generates about 30% of the world's electricity. It has about 55,000 wind turbines, 7,000 gas turbines, $19 billion in annual revenue, 1 billion patients served annually, and a 4 million+ installed base of equipment.
