This is what happens when you make massaging finance more important than actually making stuff:
General Electric has finally found a buyer for its lighting business and will be selling off its last consumer-facing business after more than 120 years of operation.Jack Welch has destroyed GE by eating its seed corn, and the Wall Street masters of the universe still think that he's a genius for it.
Boston-based GE said today it would divest the lighting business to Savant Systems, a smart home management company also based in Massachusetts. The companies did not disclose financial terms of the deal, but sources told The Wall Street Journal that the transaction was valued at about $250 million.
Savant specializes in full smart home systems for the luxury market. Acquiring a lighting business directly will allow it to take advantage of vertical integration and take more control over the physical equipment it installs in consumer' homes. Savant will keep the business's operations in Cleveland, where it is currently based, and will receive a long-term license to keep using the GE branding for its products.
The lighting business is GE's oldest segment, dating all the way back to the company's founding through a series of mergers with Thomas Edison's companies in the late 1880s and early 1890s. The company became a conglomerate early, investing in a wide array of technology and communications businesses. It moved toward aviation and energy and away from consumer products through the 1980s and 1990s under CEO Jack Welch. That industrial mindset lasted into the 21st century, under CEO Jeff Immelt, from 2001 through 2017.
By 2017, though, GE was carrying a staggering amount of corporate debt—about $77 billion, analysts estimated—and GE's stock price dropped heavily through Immelt's term. In October 2017, the new CEO, John L. Flannery, promised to streamline the company's operations and divest $20 billion worth of businesses.
This is everything that is wrong with your economy in one story.