8 - Wealth analysis of General Electric

Abstract

General Electric (GE) Company is one of the world’s largest digital industrial companies with focus on software defined machines and solutions.GE is one of the world’s best infrastructure and technology company with secondary focus on financial services division. The products and services offered by GE range from aircraft engines, power generation, oil and gas production equipment to medical imaging, financing, and industrial products. Over the last decade GE’s strategy had been on transforming the portfolio to focus on industrial leadership. Recently GE undertook a major restructuring to create a unified digital business within the company called GE Digital. The GE Exit Plan of the year 2015 is the restructuring strategy adopted by GE to reduce the size of its financial services businesses and to focus on retaining financial assets which support the verticals (industrial businesses). GE Capital faces competition from various types of financial institutions. Eco imagination is GE’s growth strategy aimed to enhance resource productivity and reduce environmental impact at a global scale. GE focuses on investing in cleaner technology and business innovation and develops solution to enable growth. During the period 1981–2011, General Electric Company has made 791 acquisitions while taking stakes in 261 companies. General Electric Company had 620 divestitures during this period. Capital allocation is a major responsibility of the Board. The GE Board of Directors has oversight for risk management with a focus on significant risks like strategic, operational, financial and legal and compliance risks. GE uses currency forwards as economic hedge of forecasted foreign cash flows under long-term contracts. The top 10 funds currently hold 8.45% of the total shares held by the company. GE has paid quarterly dividend for the last 100 years. The firm has returned $33 billion to shareholders in year 2015. In 2015, GE Board of Directors had authorized new repurchase program of up to $50 billion in common stock. Under the 2007 long-term incentive plan, GE grant stock options, restricted stock units, and performance share units to employees. Most of the borrowings of GE are in financial services. GE makes investments in corporate fixed income, government mortgage and asset back securities.