Under long-serving CEO Jeff Immelt, GE is undergoing a major transformation to refocus on its bedrock industrial businesses. In the process, Immelt is dismantling the legacy of his legendary predecessor, Jack Welch. In early 2015, Immelt and his team made the landmark decision to sell most of GE Capital, the lending business built by Welch that once generated half of the conglomerate’s profits but sank under the heavy regulatory regime adopted following the financial crisis. In just eighteen months, Immelt has sold, or reached agreements to shed, $171 billion of the financial arm’s $200 billion in assets. In mid-January 2016, GE agreed to unload another barely profitable bulwark, its consumer appliance franchise, to Haier of China for $5.4 billion. Immelt is betting heavily on lighting homes and powering plants across the globe; in November, GE acquired the power generation arm of France’s Alstom for $10 billion, greatly strengthening its reach in gas-fired, “combined cycle” plants that are driving the industry’s growth. So far, the results are mixed. In the first quarter, three GE staples — jet engines, medical equipment, and power generation — all showed good revenue growth, while two others, oil and gas, and transportation equipment, including locomotives, dropped sharply. All told GE’s industrial profits fell 7% from the first quarter of 2015. Indeed, the strategic thrust is daring, and so far shareholders are applauding: Since the start of 2015, GE’s stock has delivered a 25% return, easily waxing the S&P 500 by 23 points.
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