General Electric CEO John Flannery wasn’t kidding when he said there would be no sacred cows during his review of which businesses should stay and which ones should go.
GE previously unveiled the sale of smaller businesses, such as a health IT division and its electrification products. It put its lighting division on the block, and found a merger partner for its train unit.
Today, Flannery unveiled what he says is the finale to his radical corporate reshaping. Boston-based GE will eventually exit its oil and gas business, formed just last year through a merger with Baker Hughes. The company will also spin off its health care business — a bit of a surprise since it’s GE’s third-largest division and is performing strongly. Flannery ran it before becoming CEO last year, and cemented his reputation by turning it around. But you know what? No sacred cows.
The GE that emerges will be much leaner, with units that fit more comfortably together under one roof. However, it will still be a powerhouse by most measures: The three main groups that will remain — power, aviation, renewable energy — together generate more than $70 billion in sales a year. GE will be roughly twice the size of the next biggest public company in Massachusetts (TJX Cos.) based on revenues.
The long-awaited conclusion to Flannery’s divestiture campaign coincided with the day Walgreens replaced GE in the Dow Jones industrial average. A long-foundering stock price was one reason for GE’s departure. (At least shares rose nearly 8 percent today.)
Flannery doesn’t seem fazed about leaving the club. He told employees last week that the Dow membership was important to GE’s history, but it won’t define GE’s future. If anything, he said, the change was motivation to show the world what this new GE can accomplish.Jon Chesto can be reached at firstname.lastname@example.org. Follow him on Twitter @jonchesto.