In a push to “get deeper not broader,” GE CEO Jeff Immelt wants to follow the sales of the company’s media, plastics and insurance businesses with the sale of its lightbulb business. The GE business has certainly moved in a new direction over the last 16 years, but tearing out one of the roots of the company is jolting reminder of how the business has changed. On GE’s web site there is a section dedicated to Thomas Edison and the founding of the company. The story reads:
1876 was also the year that Thomas Alva Edison opened a laboratory in Menlo Park, New Jersey, where he could explore the possibilities of the dynamo and other electrical devices that he had seen in the Exposition. Out of that laboratory was to come perhaps the greatest invention of the age – a successful incandescent electric lamp.
By 1890, Edison established the Edison General Electric Company by bringing his various businesses together.
During that period, a competitor emerged. The Thomson-Houston Company became a dominant electrical innovation company through a series of mergers led by Charles A. Coffin, a former shoe manufacturer from Lynn, Massachusetts.
As both businesses expanded, it had become increasingly difficult for either company to produce complete electrical installations relying solely on their own patents and technologies. In 1892, the two companies combined. They called the new organization the General Electric Company.
Several of Edison’s early business offerings are still part of GE today, including lighting, transportation, industrial products, power transmission, and medical equipment.
The bold emphasis is mine. Of all the original Edison businesses listed, only lighting is currently being targeted for sale. Divesting the lighting business will cap off the removal of consumer businesses from GE’s main lineup. The Wall Street Journal’s Dana Mattiolo and Thomas Gryta report:
The lighting unit GE is considering selling is now a small and shrinking business that consists of residential LED lighting and connected-home technology in North America. GE would hold on to a separate business, called Current, that provides commercial LED lighting, the people said.
The company’s lighting business, including the commercial portion, had about $2.2 billion in revenue last year, or less than 2% of GE’s total. The consumer unit has been based at a manufacturing complex called Nela Park in East Cleveland, Ohio, for more than a century.
While the potential proceeds are a drop in the bucket for GE, which has a market value of more than $250 billion, the consumer businesses were once core to the company.
Less than year after he took the helm, Mr. Immelt walled off the lighting and appliances business into a new unit, then called GE Consumer Products, that put most of the consumer business under one roof. Even then, in 2002, the shift away from the products that defined the company in the early 20th century was clear: The unit only made up 6% to 7% of GE’s revenue.
For decades, GE’s home appliances and lightbulbs formed a link between American consumers and one of the country’s oldest and largest industrial companies. In 1935, the first Major League Baseball night game was played under GE lights. A GE engineer invented the LED light in 1962.
The company’s popular TV ad campaigns promised to “Bring good things to life,” but the growth and profitability of the consumer businesses waned.
Last year, GE sold its appliances business to China’s Haier Group for $5.4 billion. GE gave the Chinese buyer the right to continue to use its brand on stoves, fridges and other appliances for several decades as part of the deal. Thousands of workers and a sprawling factory complex in Louisville, Ky., were transferred in the deal.
Read more here.
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