GE's most popular de financialization wants to reg

  • Detail

Ge de financialization wants to regain industrial glory

how to return to a basic industrial company? Ge in the United States decided to adopt the way of de financialization, and the target is most of its $363billion financial sector

in Jeff Immelt believes that GE's future operations will be boosted by such divestitures. Financial risks have intensified and supervision has become stricter, especially the industrial sector that supports finance to obtain lower financing costs, is also facing a more severe situation, and Ge must rise again

before that, the financial business had planted the wings of imagination for GE in the Jack Welch era, helping it develop into the world's largest diversified company, known as the most successful business group, and creating a model of the successful combination of industry and financial capital

I have learned to be a better risk manager. Immelt said that the financial crisis is a good teacher. I can't find comfort in the checklist, but I have to spend time on things that can affect the future

GE's divestiture of financial business may make the business community rethink the way finance and industry are combined, said Li Guowei, GE's public relations director in China

inevitably, the outside world will always compare Immelt with his predecessor Jack Welch, who was called a business wizard. Although Immelt suffered from the panic caused by the 9.11 incident in the United States three days after taking over as CEO, and a few years later suffered from the global financial crisis, Immelt faced more rigorous scrutiny in the volatile global economic environment

Immelt is leading Ge in subtraction to establish a simpler and more valuable basic industrial company. When making this major decision, we have been asking ourselves: what is happening in the world, is this the right time, is this beneficial to customers and investors, and what will ge look like in the future

he will usher in a new era of industrial interconnection for GE, lead the American industrial interconnection industry alliance, and compete with the German government's industry 4.0 to compete for the Pearl on the next industrial crown

the good play is still behind, Immelt said


when GE's business model is regarded as the best sample of the combination of industry and finance, it is doing the opposite

ge China CEO Duan Xiaoying told the economic observer that the divestiture of the financial business was due to Immelt's efforts to promote change over the years. In Immelt's view, the mode of large-scale financial companies supported by large funds has changed, and it is difficult to continue to produce ideal returns in the future

ge used to be the second largest market capitalization stock in the world. However, the depressed share price for several years has made American investors continue to exert pressure on the company's management. They increasingly dislike comprehensive and diversified large enterprises because it is difficult to obtain better valuations in the capital market

although Ge started in industry, a considerable proportion of its profits today come from finance. The group's focus once deviated from its main business. Especially when GE Capital began to become an independent business unit, its development focused on finance accelerated. Until 2014, the financial business still contributed 42% of GE's profits

today, Ge is eager to spin off its financial business to avoid the pressure of more stringent financial supervision. In addition, Immelt hopes that after reshaping the company's business portfolio, it can bring higher valuations to the company's stock. The new plan is that GE should become more simplified, reducing the proportion of financial business profits to 25% in 2016 and 10% in 2018

on April 10, 2015, GE announced that it would further shrink its financial services business. In the next two years, it would divest most of its financial businesses worth $363billion, including the sale of its real estate business to a consortium led by Blackstone and Wells Fargo Bank for $26.5 billion. On April 20, it was reported that GE was in preliminary negotiation with Wells Fargo Bank to sell its $74billion commercial loan and leasing portfolio business

On the day of the news, Jack Welch, the former CEO of Ge, publicly commented that the decision to divest the financial business was a wise decision in line with the current pattern of the financial industry

before that, Ge spun off some consumer loan businesses and sold them to KKR and Deutsche Bank Consortium for a $8.2 billion. Last year, it also spun off its financial credit card business and consumer finance company

in order to boost the stock price, Ge also announced a $50billion stock repurchase plan, which is the second largest repurchase plan of American enterprises after Apple's $90billion stock repurchase plan last year

the company's stock performance last year dragged down the S & P 500 return curve, Immelt said. He hopes that after reshaping the company's business portfolio, it can bring higher valuations to the company's stock. The new plan is that GE should become simpler, reducing the proportion of financial business profits to 25% in 2016 and 10% in 2018

on April 17, Ge reported a revenue of $29.36 billion in the first quarter, a year-on-year decrease of 12.5%, lower than the market expectation of $34.23 billion. At the same time, the company had a net loss of $13.6 billion. We want to change from a comprehensive enterprise with a wide range of businesses to a more focused infrastructure giant. Immelt said in a letter to shareholders that we should make GE succeed in a volatile global environment and devote ourselves to leading a new round of industrial progress


Li Guowei, the public relations director of Ge China, told the economic observer that GE's financial business was indeed subject to more and more strict supervision locally. For example, consumer finance was once an important source of profit for GE Capital. At first, it was to fill the gap in the market and do some businesses that banks were unwilling to do, but now it can't be better carried out due to stricter supervision

in the first quarter of this year, the financial business revenue decreased by 39% and the profit decreased by 21%. GE Capital was recognized as a sys temicallyimportantfinancialinstitutu-tion by the US financial stability Regulatory Commission in 2013. The so-called systemically important financial institutions refer to financial institutions with large business scale and high complexity, which will impact the regional or global financial system once risks occur

it is hard for the outside world to imagine that this most successful business group with a 130 year history was suddenly regarded by investors after the financial crisis as using activators (zinc oxide, urea, etc.) to reduce the decomposition temperature of foaming agents. As a leprosy patient, everyone dared not approach. In 2001, when Immelt took over Ge, the financial department has become the Department with the highest profit margin within the group

in 2009, S & P and Moody's lowered GE's rating respectively, which was the first time that GE lost Moody's highest rating in 40 years. It is worth noting that GE's financial department relied on the credit evaluation of Ge group to obtain low-cost credit funds

during this period, due to the inability to extend short-term debt, Ge issued a new announcement to Buffett's Berkshire Hathaway company at a high price of 10% of the annual dividend. Six eligible "white list" enterprises issued $3billion in preferred shares, and received relief from the Federal Reserve's commercial paper purchase plan. Its financial business was questioned by the market because of its excessive exposure to consumer credit, real estate foam and other risks. This panic reduced GE's market value by $264billion that year, and its share price hit its lowest level in 17 years

ge expects to bring about a boost to the stock price through reform and better focus on resources. On the same day, GE's share price rose by 10%

Huang song, an associate professor of finance at Peking University, also told the economic observer that GE Capital was the first to serve its own business, but in the subsequent development, it became farther and farther away from its main business. After diversification and expansion, shareholders hope to operate professionally, which can be stripped or split for listing, so as to obtain a better valuation of the capital market, which is also the need of market value management. On the other hand, the financial market in the United States is developed, especially after the financial crisis, some Ge financial services can have lower cost options in the market. In the future, in the financial field, Ge will only retain the financial leasing business related to aviation, medical treatment and energy. According to Li Guowei, it will divest some businesses with poor earnings or poor prospects, and retain a small number of financial businesses that support the industrial sector

Li Guowei told the economic observer that although GE's financial business is still profitable and has not been a drag on the industrial business, based on the consideration of obtaining ideal returns, the company decided to focus more on high-end manufacturing. If the financial business is sold during the financial crisis, it will not get a reasonable price, and there will not be enough buyers. Now is a good time to sell

on April 10, Moody's downgraded GE's senior unsecured debt rating from A3 to A1. S & P said it believed that GE would divest its financial assets in a safe and responsible manner to creditors. At the same time, it said that if we think that GE's financial policy is more radical, we will choose to downgrade


we have reshaped Ge in the turbulent economic environment to participate in the competition at its best. Immelt pointed out that when we build the next industrial era, focusing on customers is more important than ever. In addition to de financialization, GE's industrial sector is also adjusting, including the company's basic industries

as we all know, Ge originated from the great inventor Edison, who founded the electric light company in 1878 and renamed it Edison General Electric Company (GE) two years later. In 1892, the old Morgan of the Morgan consortium invested and merged into the new general electric company. According to the 2013 financial report, GE's home appliances and lighting business accounted for only 6% of the company's total sales and contributed 2% to the total profit

last year, Ge sold its home appliance business to Electrolux, a Swedish home appliance manufacturer, for $3.3 billion, leaving the home appliance sector. Regarding this transaction, Immelt said that GE's strategy is to become the world's best infrastructure and technology company, which will bring GE more than $1 billion in pre tax profits

although our home appliance business has a history of more than 100 years, it is not our core business and does not help our competition, Immelt said

according to market news, Ge may also sell its lighting business. It is believed that the lighting business has gradually faded in competition with Philips and OSRAM due to its neglect to enter into led in recent years. However, Duan Xiaoying told the economic observer that she had not heard the news

provide a high-quality platform for exchange, learning and cooperation in the industrial field. However, Duan Xiaoying told the economic observer that the lighting business is not mentioned in the business segment that the company will vigorously expand in the Chinese market this year, and the new energy business is one of the main directions

at present, Ge is looking forward to the ruling of the European Commission on July 8. The company is making efforts to acquire Alstom's power generation equipment business with us $16.9 billion. It hopes to complete the acquisition procedures this year, integrate its renewable energy department and establish a renewable energy department in France. GE's acquisition repulsed a bid from rival Siemens

about 25% of GE's existing industrial sector comes from the crude oil and natural gas business. The company has invested $14billion in oil and gas companies. At the end of last year, the company predicted that with the decline of crude oil price, the revenue and profit of its crude oil and natural gas business may decline by 5% in 2015. Some analysts said the decline could be even greater

on April 17, GE announced the first quarter

Copyright © 2011 JIN SHI