General Electric is getting out of the lighting business 139 years after Thomas Edison founded that part of the company to conduct research on his incandescent bulb.
CEO John Flannery announced the move Monday, saying he wants to create a ‘smaller, simpler’ GE amid falling profits and tumbling share values at one of the world’s largest and most diverse firms.
The Edison Electric Light Company was founded in 1878 as the inventor began experiments that would eventually lead to the creation of the first commercially viable electric lighting system.
General Electric has announced plans to sell off its lighting business 139 years after that part of the company was founded by Thomas Edison to develop his incandescent light bulb
Edison was not the first person to experiment with the light bulb, but he was the first to develop a system which made the device practical and economically viable
While no fewer than 22 inventors had developed some form of bulb, Edison and his company were the first to create a practical light and incorporate it into a system that could be easily installed.
It was through the Edison Electric Light Company that he raised funds to conduct this research and later market the system.
Just a year after the company was founded, Edison was able to demonstrate his system to an eager audience at Menlo Park, California, proclaiming: ‘We will make electricity so cheap that only the rich will burn candles.’
In 1880 the Edison system saw its first commercial application after being installed on a steamer called Columbia after the owner had attended the demonstration.
The Mahen Theatre in Brno, in the modern-day Czech Republic, was the first public building to use the bulbs, which were installed in 1892.
It was the lighting business which formed the bedrock of the Edison General Electric Company when it was incorporated in New York the same year.
The Edison Electric Light Company was one of the original kernels of General Electric and forms the oldest asset of the conglomerate
Once the fourth biggest company in the world, the fortunes of General Electric have decline in recent years thanks in part to falling oil and gas revenues
In 1892 that company, along with two other electrical firms also owned by Edison, were brought together as General Electric.
GE was one of the original 12 companies listed on the Dow Jones Industrial Average when it debuted in 1896 and is the only one still listed, though it has not held a continuous spot on the list.
Over the years GE diversified its operations to include jet engines, locomotives and even financial companies.
In 2016 it reported revenues of more than $123billion from assets worth $365billion, with its main cash earners being the aviation and power sectors of the company.
At its height in 2012, GE was listed as the fourth-largest company in the world by Forbes, and this year occupied number 13 on a Fortune list of firms with the highest US revenue.
However, it has since run into trouble thanks in part to falling revenues from its oil and gas division.
As well as selling the lighting business, Mr Flannery also announced plans to sell the locomotives division, another one of GE’s longest-standing assets.
CEO John Flannery announced the move on Monday as part of a restructuring of GE amid falling share prices and shrinking profits
Mr Flannery’s announcement prompted a seven per cent slide in GE’s share price as he also broke the news that dividends to shareholders would be cut for the second time since 1938
Shares in GE slid seven per cent on Monday on the back of the announcement, bringing the total fall in the last year to 38 per cent, the Financial Times reports.
Analysts told MSNBC that GE’s spot on the Dow Average is now at risk, though they are not expecting it to be removed any time soon.
‘Since it is trading at a low share price and has a small weighting in the index, that does put it at an increased risk of getting removed,’ said Alex Bryan, director of passive strategies research at Morningstar in Chicago.
GE’s shares last week closed under $20 for the first time in more than five years before Mr Flannery announced it would be cutting its dividend to shareholders for only the second time since 1938.