The incredible shrinking GE is about to get even smaller

1678 views
31 replies
1 rating 2 rating 3 rating 4 rating 5 rating
  • Member since
    January, 2003
  • From: Kenosha, WI
  • 5,787 posts
The incredible shrinking GE is about to get even smaller
Posted by zardoz on Friday, November 03, 2017 5:49 PM

GE has already jettisoned its gigantic real estate portfolio, its dishwasher and appliance business, and legendary media properties NBC and Universal Studios. More recently, it unloaded its water business and a unit that makes electrical equipment for utilities. Even the light bulb division is up for sale....

....GE recently revealed plans to get rid of businesses worth at least $20 billion in the next year or two. One unit that could be on the chopping block is its struggling railroad business, which GE has owned for more than a century....

....Unlike companies that make simple products, GE's jet engines, locomotives and power plant systems require expensive engineering, factories, equipment and manpower to create....Another business getting hit hard is the railroad unit. GE is planning to get out of the railroad business through a potential sale or spinoff, the Wall Street Journal reported last week. (All emphasis mine)

http://money.cnn.com/2017/10/31/investing/ge-shrinking-cash-crunch-asset-sales

 

 

  • Member since
    October, 2008
  • From: Calgary
  • 1,538 posts
Posted by cx500 on Friday, November 03, 2017 6:12 PM

I believe it already exited the freight car leasing and repair business a year or two back, with the large non-tankcar fleet sold to Wells Fargo.

  • Member since
    August, 2010
  • From: Henrico, VA
  • 7,262 posts
Posted by Firelock76 on Friday, November 03, 2017 6:50 PM

Even the light bulb division is up for sale?

That humming sound you hear coming from West Orange NJ is Thomas Edison spinning in his grave at about 1,500 RPM.

  • Member since
    September, 2014
  • 992 posts
Posted by ROBERT WILLISON on Friday, November 03, 2017 7:04 PM

Firelock76

Even the light bulb division is up for sale?

That humming sound you hear coming from West Orange NJ is Thomas Edison spinning in his grave at about 1,500 RPM.

 

ge has been making light bulbs in Cleveland since I think since the early 50's. Just announced thier biggest drive Thur outdoor Christmas lighting and animations display in years. It's the first drive Thur in many years, since the roadways and  bridges in thier Cleveland campus  ( neala park ) are small. They have included many of thier classic  Xmas animation scenes.

 I can remember many drive by with our family looking at the  many tremdous decorations in Cleveland area. Might be worth a trip this year if this going to be thier swan song. 

  • Member since
    September, 2014
  • 992 posts
Posted by ROBERT WILLISON on Friday, November 03, 2017 7:55 PM

Firelock76

Even the light bulb division is up for sale?

That humming sound you hear coming from West Orange NJ is Thomas Edison spinning in his grave at about 1,500 RPM.

 

get has been making light bulbs in Cleveland since I think the early 50's. Just announced thier biggest drive Thur outdoor Christmas lighting and animations. It's the first drive Thur in many years, since the roadways and  bridges in thier Cleveland campus are small. They have included many of thier classic  Xmas animation scenes.

Might be worth a trip this year if this going to be thier swan song.

  • Member since
    December, 2006
  • 1,318 posts
Posted by YoHo1975 on Friday, November 03, 2017 9:00 PM
There's a discussion on this in the locomotive subforum already. I believe the WSJ article was speculation Loco division isn't for sale yet.
  • Member since
    January, 2010
  • 210 posts
Posted by seppburgh2 on Friday, November 03, 2017 9:10 PM

Some one help me out please.  So after the 20B fire sale,  what will GE make?  Or is the plan to become a holding company with a big wad of cash and nothing to make?  I don't understand.

  • Member since
    June, 2009
  • From: Dallas, TX
  • 2,703 posts
Posted by CMStPnP on Saturday, November 04, 2017 11:28 AM

Happily dumped their stock in 2003, you could start to see the handwriting on the wall back then because even though they were flying high financially they had no real plan or strategy for the future.    It was like they were letting out a sigh of relief that they had finally grown so big they no longer needed to worry about planning a future strategy.    Sadly, it does not work that way in a global economy.

  • Member since
    June, 2009
  • From: Dallas, TX
  • 2,703 posts
Posted by CMStPnP on Saturday, November 04, 2017 11:33 AM

seppburgh2

Some one help me out please.  So after the 20B fire sale,  what will GE make?  Or is the plan to become a holding company with a big wad of cash and nothing to make?  I don't understand.

They can use the cash from the sales to buy other assets and reposition the company onto a higher growth path with the newer companies it buys.

There was a LOT of potential in the assets that GE held though.   It just would not invest.    See how IRBT stock is doing well?     That could have been the GE appliance division had they invested in automated or robotic technology......instead of just repackaging a 40 year old appliance in a new skin.

With their locomotive division they could invest money to make the engines burn even more efficiently saving fuel and emissions, they could make the cabs more safe, they could standardize on parts, etc.    The problem is they only invest in spurts then there is a long drought of investment.    They need a long term business strategy, IMO.

  • Member since
    February, 2003
  • From: Guelph, Ontario
  • 3,459 posts
Posted by Ulrich on Saturday, November 04, 2017 2:02 PM

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

  • Member since
    December, 2007
  • From: Southeast Michigan
  • 2,836 posts
Posted by Norm48327 on Saturday, November 04, 2017 2:36 PM

Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to. 

As is their production of turbofan engines for airliners. IMO, they would be unwise to dump either. Eh?

Sorry, I couldn't resist. Wink

 

 

 

 

 

 

 

 

Norm


  • Member since
    May, 2003
  • From: US
  • 12,545 posts
Posted by BaltACD on Saturday, November 04, 2017 3:07 PM

Norm48327
 
Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

As is their production of turbofan engines for airliners. IMO, they would be unwise to dump either. Eh?

  Sorry, I couldn't resist. Wink  

When you get to the top of your field, isn't the next step to retire?

         

Never too old to have a happy childhood!

  • Member since
    March, 2003
  • From: Central Iowa
  • 3,917 posts
Posted by jeffhergert on Sunday, November 05, 2017 2:50 AM

Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

 

Especially since (IMO) they currently have the better product.

Jeff

  • Member since
    June, 2003
  • From: South Central,Ks
  • 5,896 posts
Posted by samfp1943 on Sunday, November 05, 2017 8:00 AM

BaltACD

 

 
Norm48327
 
Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

As is their production of turbofan engines for airliners. IMO, they would be unwise to dump either. Eh?

  Sorry, I couldn't resist. Wink  

 

When you get to the top of your field, isn't the next step to retire?

 

To what BaltACD said "...When you get to the top of your field, isn't the next step to retire?.."   It might also seem that complacency  is overtaking the Corporate Hierarchy?  Are they wanting to rest on their laurels? " The phrase in use these days by management " want to get back to their 'core'...?"  Or might it just be a case of take the money and run?

 (Note: to Norm48327) For quite a while GE has operated a 'base' at Winfied, Ks. [formerly called Strother Field]; a place where they would 'replace' jet engines in commercial aircraft [based on an identified maintenance cycle(?)]  At one point they did overhaul engines there as well. Now the engines are just trucked in from another GE facility, for replacement. (?)

Sam

 

 


 

  • Member since
    July, 2008
  • From: Marietta, GA
  • 865 posts
Posted by rdamon on Sunday, November 05, 2017 9:57 AM

jeffhergert

 

 
Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

 

 

 

Especially since (IMO) they currently have the better product.

Jeff

 

 

Or a prime time to spin it off since it will be at peak value.

  • Member since
    December, 2007
  • From: Southeast Michigan
  • 2,836 posts
Posted by Norm48327 on Sunday, November 05, 2017 11:14 AM

BaltACD
When you get to the top of your field, isn't the next step to retire? Add Quote to your Post

Balt,

You have a valid point, back in the forties and fifties it was thought that what was good for General Motors was good for the nation.Long run, thanks to mismanagement proven that mantra wrong. I've watched GM execs  come and go with little change in the direction of a  corporation. Harrison, OTOH, wants massive changes right now.

It was a different era and the large corporations had the upper hand. GM, Ford, Chrysler, and many other corporations helped us win WWII through their efforts at productionof military vehicles .In the forties, my dad worked on the DUKW development, the six by six trucks  among others and I recall as a child visiting GM's proving grounds at Milford while testing of military vehicles was still paramount. Secrey at that point did not seem to be of great concern given the opposition had no way of observing activities there.  Today, GM's proving ground in Milford is fenced and there are lots of Pines to obscure any view of operations there.

I am certain tree 68 can confirm my observation but OTOH he may be too young to recall some of those details. Laughingly said, I dont think Larry was around in the forties. He's younger than I.

Norm


  • Member since
    March, 2003
  • From: Central Iowa
  • 3,917 posts
Posted by jeffhergert on Sunday, November 05, 2017 11:26 AM

rdamon

 

 
jeffhergert

 

 
Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

 

 

 

Especially since (IMO) they currently have the better product.

Jeff

 

 

 

 

Or a prime time to spin it off since it will be at peak value.

 

Great for GE stockholders.  Maybe not so great for those that use the product, depending on who buys the business.

Jeff

  • Member since
    December, 2007
  • From: Southeast Michigan
  • 2,836 posts
Posted by Norm48327 on Sunday, November 05, 2017 1:43 PM

Good point.

Norm


  • Member since
    May, 2003
  • From: US
  • 12,545 posts
Posted by BaltACD on Sunday, November 05, 2017 2:20 PM

Not so great for GE Transportation employees either.

         

Never too old to have a happy childhood!

  • Member since
    December, 2007
  • From: Georgia USA SW of Atlanta
  • 8,274 posts
Posted by blue streak 1 on Sunday, November 12, 2017 12:35 PM

Although LEDs are taking over always considered GE light bulbs to be superior to any other brands.  What happens to product support for locos when that department is spun off ?

Bet its PTC support will go to H***

  • Member since
    May, 2005
  • From: S.E. South Dakota
  • 11,398 posts
Posted by Murphy Siding on Sunday, November 12, 2017 8:11 PM

Ulrich

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

 

It doesn't really matter how many players are in the game, if you're not making any money, it's not fun. I presume they're getting out because they're not making money.

Thanks to Chris / CopCarSS for my avatar.

  • Member since
    May, 2005
  • From: S.E. South Dakota
  • 11,398 posts
Posted by Murphy Siding on Sunday, November 12, 2017 8:12 PM

zardoz

GE has already jettisoned its gigantic real estate portfolio, its dishwasher and appliance business, and legendary media properties NBC and Universal Studios. More recently, it unloaded its water business and a unit that makes electrical equipment for utilities. Even the light bulb division is up for sale....

....GE recently revealed plans to get rid of businesses worth at least $20 billion in the next year or two. One unit that could be on the chopping block is its struggling railroad business, which GE has owned for more than a century....

....Unlike companies that make simple products, GE's jet engines, locomotives and power plant systems require expensive engineering, factories, equipment and manpower to create....Another business getting hit hard is the railroad unit. GE is planning to get out of the railroad business through a potential sale or spinoff, the Wall Street Journal reported last week. (All emphasis mine)

http://money.cnn.com/2017/10/31/investing/ge-shrinking-cash-crunch-asset-sales

 

 

 

What's the difference between a sale and a spinoff?

Thanks to Chris / CopCarSS for my avatar.

  • Member since
    December, 2001
  • From: NW Wisconsin
  • 3,627 posts
Posted by beaulieu on Sunday, November 12, 2017 8:27 PM

Murphy Siding

What's the difference between a sale and a spinoff?

With a spinoff the shareholders will own shares of GE Corp. which no longer owns GE transportation, plus they will receive separate shares in the former GE Transportation Corp, which will have been renamed most likely. The any value lost by GE Corp. from the spinoff of GE Transportation should be offset by the value of the shares received in GE Transportation.

  • Member since
    May, 2003
  • From: US
  • 12,545 posts
Posted by BaltACD on Monday, November 13, 2017 7:30 AM

         

Never too old to have a happy childhood!

  • Member since
    May, 2003
  • From: US
  • 2,128 posts
Posted by PNWRMNM on Monday, November 13, 2017 9:11 AM

Murphy Siding

What's the difference between a sale and a spinoff?

First, assume we are talking about some identifiable business unit.

If GE sells the unit, then the assets that are the unit transfer to the buyer and off GE's books. GE gets cash which it can use for whatever puropses the Board of Directors decides. GE will record a capital gain or capital loss on the sale. Shareholders can either hold or sell, just as they can on any given day.

In a spin-off the assets that are the unit transfer to a new corporate entity. That new entity is spun off to GE sharholders. After the spin-off shareholders have two stock certificates, one in GE, and some fraction of one in the New Company. The value of the two on the day of the transaction is equal to the one on the day before the transaction. Going forward each will trade separately. Shareholders can hold both, sell both, sell one and hold the other, sell one and buy the other.

Mac

  • Member since
    October, 2016
  • 126 posts
Posted by Saturnalia on Monday, November 13, 2017 9:24 AM

blue streak 1

Bet its PTC support will go to H***

GE already sold it's PTC and rail signalling assetts to Alstom. Funny, as they've already had some issues with the transition. 

This news was overshadowed by the bigger news of GE buying Alstom's power grid components, as part of the same deal. It was finalized in late 2015, leaving Alstom with all of GE's rail business except the Locomotive Unit. 

  • Member since
    February, 2003
  • From: Guelph, Ontario
  • 3,459 posts
Posted by Ulrich on Monday, November 13, 2017 2:10 PM

 

 
 

With only two major locomotive manufacturers left, I'm surprised one of them would want to get out of that business. After being number 2 for decades, they clawed their way to number 1 a couple of decades ago.. their customer base is doing very well to boot. Sounds to me like a good business to hang on to.  

 

 

 

It doesn't really matter how many players are in the game, if you're not making any money, it's not fun. I presume they're getting out because they're not making money.

 

 

[/quote]

I don't know why they're getting out. GE as whole hasn't done well at all over the last year.. not sure how its locomotive division has done in comparison to the other divisions. Maybe not the ideal business to be in when your shareholders want steadily increasing  dividends and don't have the patience for reinvesting  for R&D.   

 

  • Member since
    December, 2001
  • From: Northern New York
  • 17,350 posts
Posted by tree68 on Monday, November 13, 2017 2:56 PM

Ulrich
Maybe not the ideal business to be in when your shareholders want steadily increasing  dividends and don't have the patience for reinvesting  for R&D. 

Unfortunately, this seems to be the business model for all too many investors these days.  Just show me the money.  If you don't show me the money, I'll take my business elsewhere.

LarryWhistling
Resident Microferroequinologist (at least at my house) 
Everyone goes home; Safety begins with you
My Opinion. Standard Disclaimers Apply. No Expiration Date
Come ride the rails with me!
There's one thing about humility - the moment you think you've got it, you've lost it...

  • Member since
    May, 2003
  • From: US
  • 12,545 posts
Posted by BaltACD on Monday, November 13, 2017 3:03 PM

tree68
 
Ulrich
Maybe not the ideal business to be in when your shareholders want steadily increasing  dividends and don't have the patience for reinvesting  for R&D.  

Unfortunately, this seems to be the business model for all too many investors these days.  Just show me the money.  If you don't show me the money, I'll take my business elsewhere.

I think it has gotten to the point with the 'institutional investor' - tell me how great you will be tomorrow (and back it up by beating the street every measurement period).

GE as a corporation, did not beat the street.  In addition they can't make the right kind of snow job sales pitch.

         

Never too old to have a happy childhood!

  • Member since
    March, 2008
  • 634 posts
Posted by ruderunner on Tuesday, November 14, 2017 4:32 AM

isnt GE one of the companies that make up the DJIA?  Meaning essentially that GE is the street.

PC, PennCentral or Plywood Contraption? Either way I'm modeling it...

Join our Community!

Our community is FREE to join. To participate you must either login or register for an account.

Newsletter Sign-Up

By signing up you may also receive occasional reader surveys and special offers from Trains magazine.Please view our privacy policy

Search the Community