The fall of the industrial giant: General Electric (GE) completed spin-off listing

      Following the January 2023 spin-off from General Electric (GE) medical equipment business GE HealthCare listing, earlier this month, the other two business segments also completed the independent listing.

       On April 2, local time, GE released a notice saying that GE Aerospace (aerospace) was established as an independent investment-grade public company after the completion of the GE Vernova spin-off. At this point, GE has been planning for many years to complete the successful completion of the spin-off and listing program. It is understood that GE Aerospace is listed on the New York Stock Exchange (NYSE) under the ticker symbol "GE". As you can see, Aerospace has become the core of the original group.

       Two companies listed on the same day

      At 9:30 a.m. EST, GE Aerospace and GE Vernova jointly rang the opening bell at the New York Stock Exchange. In this regard, GE Aerospace Chairman and CEO H. Lawrence Culp Jr. said, "With the successful listing of three separate public companies, today marks the historic final step in GE's multi-year transformation."

       Publicly available information shows that GE Aerospace, with approximately 44,000 civil engines in service and approximately 26,000 military (defense) engines worldwide, is a global leader in aerospace power, services and systems integration. in 2023, the company's adjusted revenues will be approximately $32 billion, with 70 percent of that amount coming from strong economics in the services and engine aftermarket.

      In Greater China, the company has more than 7,700 engines in service and an open repair service network including eight overhaul shops and one express repair shop.

      At its investor day in March, GE Aerospace reaffirmed its 2024 revenue guidance and presented its long-term financial outlook, including an expected operating profit of approximately $10 billion in 2028.

      Another company listed on the same day, GE Vernova is an independent company focused on accelerating the energy transition, with operations spanning power generation, wind power and electrification.

       GE Vernova's equipment provides 30% of the world's electricity, and the company has the world's largest installed base of more than 7,000 gas turbines and about 55,000 wind turbines, according to the company. As of 2024, the company employs more than 80,000 people in more than 100 countries.

       In mid-February, GE announced that it was preparing to spin off GE Vernova in early April, following strong results and continued momentum in 2023, said the company in a registration statement filed with the U.S. Securities and Exchange Commission (SEC) about its plans to spin off GE Vernova.

       GE Vernova will be divided into three operating segments:

       Power: includes the design, manufacture and maintenance of natural gas, nuclear, hydro and steam technologies that provide the key foundation for dispatchable, flexible, stable and reliable power.

       Wind: includes wind power technologies, including onshore and offshore wind turbines and blades, for utilities, renewable energy developers, independent power producers and commercial customers.

      Electrification: Includes grid solutions, power conversion, solar and storage solutions, collectively known as electrification systems, and digital technologies.

      "Industrial Internet" Initiators Sell Core Assets

      Founded in 1892, GE is now in its 132nd year, during which time the company has grown rapidly through the Second Industrial Revolution, represented by electricity, and has survived the Third Industrial Revolution. Although in the twentieth century in the 1980s, GE suffered a major business crisis, but the good thing is that there is "the most respected CEO", "the world's first CEO" called Jack Welch (Jack Welch) under the leadership of the company's market value from Less than $ 150 billion soared to $ 480 billion, profitability is ranked first in the world.

      Entering the new century, the fourth industrial revolution has been frequently mentioned, and the concept of "Industry 4.0" proposed by Germany has received great attention.

      In 2006, the German federal government adopted the "High Technology Strategy 2020" strategy document, which focuses on the introduction of "Industry 4.0".

      Six years later, in 2012, GE first put forward the concept of "industrial Internet", and the following year, the company launched the world's first industrial Internet platform product Predix.

       In 2015, Predix 2.0 was launched, with more than 50 million items of data being monitored and analyzed. In the same year, the company established the GE Digital digital group, whose business not only covers software and IT functions, but GE Digital is its core asset.

       However, just as the industry was concerned that Predix was about to have a career in the industrial Internet, it was rumored in August 2018 that GE planned to sell the Digital Group, including the industrial Internet platform Predix, MES software Proficy, and management APM software (ServiceMax and Meridium).

       Comments on GE's "shallow" failure in industrial internet deployment have been mixed. Some analysts believe that Predix's business was conducted only in-house in the early stages, and the development model is more traditional, unable to keep up with the external market for rapid iteration requirements. Other voices believe that the sale of Predix shows that the construction of cross-industry and cross-domain industrial Internet platforms is a long-term and arduous systematic project, which cannot be accomplished overnight.

       Abatement of massive debt through IPO

       In November 2021, GE announced that it would spin off and form Aerospace, Healthcare and possibly Renewable Energy and Power into three entities and seek a separate IPO. The company claimed that splitting the businesses would not only improve its financial position, but also help improve execution efficiency and drive growth. According to GE's proposed spin-off and series of investment plans, it will help it eliminate as much as $75 billion in debt by the end of 2021.

       In addition, GE has taken a series of initiatives over the past few years to solidify the growth of its key businesses, including the reduction of more than $100 billion in debt since 2018, according to public information.

       And thanks to GE's long history and accumulation of innovation, a solid foundation for growth has been laid for the newly split companies GE Healthcare, GE Vernova and GE Aerospace.

      Write in the end

      In recent years, with the changes in the external business environment and internal problems caused by the lack of corporate management, many of the world's leading large-scale industrial and automation companies, continue to slim down and downsize, or sell or spin off non-core assets.

      For example, as a major player in the industrial control field, Honeywell announced about six months ago a business portfolio adjustment program, focusing on three major trends: automation, future aviation and energy transformation. "Each business segment is underpinned by our strong digital capabilities and solutions. The simplified structure will allow Honeywell to realize synergies that will accelerate the innovation process and leverage financial strengths." So said Vimal Kapur, CEO of Honeywell. 

     There are also Toshiba and Siemens. Due to the deep debt quagmire, in order to raise funds, Toshiba not only sold a large number of non-core assets, and even the high-quality and good cash flow storage business spinoff. And similar to GE, which has an unrivaled scale of business assets, Siemens has been selling off a lot of its non-core assets and spinning off several of its major assets into separate listings.