General Electric’s mission and vision
General Electric Company’s (GE) mission is to usher in the next industrial era and to “build, move, power, and cure the world.” Its vision is to focus on businesses that connect to its core competencies and is a market leader in.
GE’s strategy is to reshape its portfolio from a broad conglomerate to a more focused industrial leader. The portfolio goal for 2014-2016 is to achieve 75% of operating EPS from industrial businesses and to grow EPS each year, returning $50 billion to investors to repurchasing shares in order to increase margins and returns. The company also plans to exit those businesses that are deemed to be non-strategic or that are underperforming or does not have a dominant market share.
General Electric’s strategic portfolio moves
Some of the strongest portfolio moves that the company has undertaken include the acquisition of Alstom’s Power and Grid business, the spin-off of Synchrony Financial (SYF), and the deposition of its appliance and lighting segment.
The acquisition of Alstom’s Power and Grid business (for $10.3 billion) was the largest in GE’s history and brought 65,000 employees in more than 100 countries, along with additional $20 billion in annual revenue. Alstom offers complementary products and services in power and greatly strengthens GE’s position in the power sector. (Please refer to Part 13 for better understanding of the Alstom deal.)
The appliance business
Meanwhile, GE has sold its appliance business to Haier (subject to regulatory approvals), as that business was not GE’s core strength, nor was its competitive position favorable. (We’ll look at this deal in detail in Part 14 of this series.)
Similarly, the decision to spin-off Synchrony Financial was a big one (see Part 15 of the series for details), and GE is downsizing its financial services business (XLF) to focus on industrials (XLI).
GE is part of the Industrial Select Sector SPDR ETF (XLI) and accounts for 11.78% of XLI’s total holdings. GE is also one of the top ten holdings of the Vanguard High Dividend Yield ETF (VYM), accounting for 3.6% of VYM’s total holdings. Microsoft (MSFT) and Exxon Mobil (XOM) are among the top holdings in the fund.