GE Announces that it will sell some of its Assets

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General Electric announced yesterday that it was changing its strategy. This would see the company back down from a conglomerate-style empire building strategy that has been used by the company for over 30 years. The announcement was made by the current chief executive John Flannery. This is an indication that he will back away from the designs that were used by his two predecessors. In an announcement on Monday, Mr. Flannery ensured that he told the shareholders that the conglomerate era is a thing of the past and it’s not coming back. This is a man who rose to the current position in August. In his detailed presentation, he made a point of repeating the term “the new GE” severally. He announced that the new business will now be a smaller company that had fewer businesses. He further said that some of the businesses that will be sold would be the oldest. For instance, there are plans to sell the light bulb industries owned by the GE as well as the railroad locomotives. Some of these businesses date back to the times of Thomas Edison, the founder of the company. Up to $20 billion in assets will be sold under the new leadership.

At the same time, General Electric announced that it would cut down its dividend and this becomes the second time that the company has managed this feat since the Great Depression. The chief executive announced that the quarterly dividend would be cut by a half. This means that every share will lose 12 cents. The chief executive said that complexity is hurting the business at the moment. He further said that this is the reason why the company wants to become simple. However, this is an ideology that past chief executives of the company can disagree with. For instance, a former CEO of the company Jack Welch once said that it was possible for the company to engage in businesses that had little in common with the initial products of GE. He argued that GE could manage other businesses such as television and this might be the reason why he acquired NBC as well as financial services companies. This didn’t end there as a number of companies acquired the idea and this resulted in a new wave of deal-making. Following the retirement of Mr. Welch back in 2001, Jeffrey R. Immelt continued with the ideology. His goal, however, was to create a new GE in the internet era.

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