The Wall Street Journal reported that the while the new road map doesn’t include radical restructuring of the 125-year-old industrial giant, it does indicate that the company will be pulling back from its transportation unit as well as GE Lighting (a line which can trace roots back to Thomas Edison). In fact, the CEO will likely exit all operations outside of the three divisions being newly focused on.
The Boston-based company is also likely to shed its 63% majority stake in Baker Hughes (BHI), which now exists as a separate public company after merging with GE’s oil and gas operations in July, and has a market value of $40 billion as per Friday’s close. This won’t be for a while though–GE is restricted from selling its stake for several years under current conditions.
Last week GE was reportedly laying off sales and software staff ahead of Flannery’s announcement in an effort to improve company profits by slashing costs and abandoning units, a person familiar with the matter told the WSJ.
GE has roughly 24,000 people employed outside its major divisions, in research, digital and headquarters functions. Flannery is expected to streamline GE’s corporate functions by moving research work into specific business units, while software development will be limited to the company’s core industries, the WSJ says. How many jobs would be affected by the restructuring moves isn’t yet clear: Flannery isn’t expected to announce a specific target Monday. At the end of 2016, GE had 295,000 employees.
The WSJ’s story implies that GE’s transportation unit, will be broken up and sold, with locomotives apparently having no place in Flannery’s strategy. The machinery that it makes for the oil drilling and renewable energy sector might conceivably be relocated in Baker Hughes and in the power division.
GE has lost $50 billion in market value since mid-July, at which point investors were told to wait four months for the new CEO to complete an internal company review and reset long-term financial projections. The stock closed Friday at $20.49.