(Bloomberg Businessweek) -- The Jeff Immelt era tested General Electric’s long-held belief that with the right training, its managers could run anything. A series of disappointing acquisitions wasn’t the only thing leading investors to declare the notion a failure, but it certainly didn’t help.
Telemundo
$2.7 billion, 2001
Hope: One of the first deals of the Immelt era, it was designed to give GE’s entertainment division (which at the time included NBC, and later Universal Pictures) a foothold in the fast-growing Spanish-language market.
Reality: Almost immediately, analysts criticized the purchase as an overpay. Within a year, Telemundo’s share of the Spanish-language prime-time audience had fallen to 16 percent from 22 percent. GE got out of the entertainment business entirely a little more than a decade later.
Amersham
$9.5 billion, 2003
Hope: The diagnostic pharmaceuticals company would put GE in position to lead “a new chapter in medicine,” in the words of Amersham CEO Sir William Castell.
Reality: Investors have complained ever since—in interviews, research reports, and among themselves—that GE spent too much on the deal. They argue that since Amersham had little-to-no overlap with GE’s other industrial businesses, there was little-to-no reason to hang on to it.
WMC Mortgage
$500 million, 2004
Hope: In a booming housing market, subprime mortgages are a guaranteed moneymaker, right?
Reality: You can guess how that went. GE got out after just three years—in the middle of the mortgage crisis—but the fallout endures. As of September 2017 the company was still facing multiple related lawsuits.
Edwards Systems
$1.4 billion, 2004
Hope: Expanding its building-security systems business would position the conglomerate to gain from population growth and a societal focus on safety in the U.S.
Reality: It did not. GE sold its entire security division five years later for just $1.8 billion.
Oil and Gas
$14 billion, 2007–14
Hope: A series of rapid-fire acquisitions—Vetco Gray, Dresser, and Lufkin Industries—was supposed to help GE grow quickly in a hot market.
Reality: From 2014 to 2017, with the collapse in oil prices, profit in GE’s oil unit plummeted 92 percent. GE merged the business with Baker Hughes and is now considering getting out of the industry.
Alstom
$10 billion, 2014
Hope: GE would be established as the undisputed global leader in power generation from natural gas.
Reality: The low-margin operation bloated GE’s power unit just as the global gas-power market slumped. Profit in the division fell 45 percent last year; GE Power is now in the process of shedding 12,000 employees.
To contact the author of this story: Rick Clough in New York at rclough9@bloomberg.net.
To contact the editor responsible for this story: Jillian Goodman at jgoodman74@bloomberg.net.
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