GE CEO: Company ‘Finished’ with Restructuring
General Electric (GE) saw its stock price surge more than 7% on June 26 after the company said it would dissolve its stake in oil services company Baker Hughes and spin off its healthcare unit over the next few years.
The announcement comes one day after GE said it would sell its Distributed Power business, which includes the company's Jenbacher and Waukesha engines, to global private investment firm Advent International in a $3.25 billion deal.
CEO John Flannery on Tuesday, in an interview with the CNBC program "Squawk on the Street," said, "I'm a believer" in his company's turnaround prospects. "I'm very comfortable when we have seen issues along the way, we've serviced them, we've dealt with them and I think today is another example of that," he said.
Flannery, who has divested several of the company's assets since taking over from long-time CEO Jeffrey Immelt last summer, including the company's electrification unit, said, "We are finished" when asked if more moves were in the offing. Flannery said the company will focus on its power, including its gas turbine products and services, renewable energy, and aviation businesses.
The company's stock had lost about half its value over the past year, although today's move in the stock price pares some of the losses. GE was officially removed from the Dow Jones Industrial Average on Tuesday, replaced by Walgreens Boots Alliance. GE, along with rival turbine manufacturer Siemens, has struggled with the global drop in demand for gas turbines due to the growth in renewable energy worldwide.
Flannery in a statement Tuesday said: "Today marks an important milestone in GE's history. We are aggressively driving forward as an aviation, power and renewable energy company-three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger.
"GE Healthcare and BHGE [Baker Hughes] are excellent examples of GE at its best-anticipating customer needs, breaking barriers through innovation and delivering life-changing products and services. Today's actions unlock both a pure-play healthcare company and a tier-one oil and gas servicing and equipment player. We are confident that positioning GE Healthcare and BHGE outside of GE's current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward."
GE finalized Baker Hughes' buyout in July 2017. The combined company had about $23 billion in annual revenue. BHGE offers oilfield gear including blowout preventers, pumps, drilling, chemicals, and other products and services for oil producers in 120 countries.
The company in its June 26 statement said its new energy strategy would be driven by GE Power and GE Renewable Energy. The company said it has a global installed base of about 7,000 gas turbines. GE in December 2017 said it would cut 12,000 jobs in its power unit.
GE last month announced plans to combine its transportation business, which makes train engines, with Wabtec, a U.S. maker of railroad equipment. The $11.1 billion deal is the biggest executed under Flannery's watch. In the deal, expected to close early next year, GE will receive a $2.9 billion cash payment. GE will own 50.1% of the combined company, with Wabtec holding the rest.
-Darrell Proctor is a POWER associate editor. (@DarrellProctor1, @POWERmagazine).
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