General Electric Company Ticker Symbol: (GE)
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| What started out as a simple light bulb/manufacturing company became something that even Thomas Edison could never have dreamed it becoming. |
From the water heater in your home to the locomotives that carry goods to market General Electric has helped build the foundation of this country for over 100 years. What started out as a merger between two manufacturing companies in 1892 has become one of the biggest companies of all time. X-Ray machines, several types of plastics, the electric toaster, RCA, NBC, and of course the inventions of Thomas Edison one of the founders of the company changed the way we live forever. I remember the first time I heard Thomas Edison founded the General Electric Company, I thought it was a typo or a different Thomas Edison but it wasn't and that blew my mind. (Apparently 9 out of 10 people don't know this either, so I didn't feel so bad afterwards.)To think, by buying the stock I could become the OWNER of the same company Thomas Edison created, as a major fan of history, that blew my mind and still does to this day. In a way I always have felt that all people who use General Electrics products to this day consumers & businesses alike are still being touched by Thomas Edison almost 80 years after his death. The other amazing fact that came in my head was GE's dividend, I know it is kind of weird to think but I also saw the dividend as Thomas Edison was giving me a paycheck as well. The same type of thoughts go through my head when thinking about ExxonMobil Corporation & Chevron Corporation with Mr. Rockefeller. As a history buff alone this was enough of a reason to AT LEAST own one share of this GE, but as a investor I looked to see what else possibly came with the company besides an amazing founder. I was amazed to learn of the things this company has done & continues to do.
Below is a SMALL (no I am not being sarcastic this is a SMALL list) of the things General Electric has done or continues to do so today.. (* means no longer does).
-Jet Engines - Light Bulbs - CT Scanners - Locomotives - Aeroderivitives - Nuclear Power
- Inverters - Power Plants - Circuit Breakers - Industrial Software - Transformers - Dishwashers
- Industrial Automation Systems - Wind Turbines - Solar Power Generators - Banking (GE Capital)
- *RCA - *NBC Universal - *Computers - Offshore Drilling Equipment - Mining Equipment - Drives
As The Coca-Cola Company was among the first businesses I ever studied GE was the first time I ever saw a conglomerate or Industrial company. This blew my mind as well, a person who bought the stock got direct ownership of a businesses that makes appliances, healthcare equipment, jet engines, power sources, and even it's own bank. Truly this was a business that overwhelmed me at first as well, understanding all the different components & how they interacted was a tumultuous challenge that to understand. However the more i studied the company, i began to realize there really wasn't much to it.
Even though building items like jet engines & CT scanners are MUCH more complicated than making a bottle of Coca-Cola they are still pretty much the same things at heart that any businesses has. In order to build these machines the company had to order supplies, had costs to selling the goods, had to pay it's employees, keep the plants running, and pay taxes (yes in spite of popular opinion GE does pay taxes). The ratio of profits of course varied across each division but for the most part they were really easy to understand overall. After all a jet engine makes a plane fly, light bulbs light a persons home, & drilling equipment drills for oil & most people I thought could easily understand that. The diversification also makes sure GE does not rely on only one component for all its profits so if one or two divisions have a rough period the other divisions will pick up the slack. GE I could safely say was not a one-trick pony.
Despite this I ran into several problems in evaluation, the company has evolved over 100 years & while it still did many things it did back in it's earliest years (Healthcare & Appliances) it does many new things as well. This ranged from defunct divisions, GE Capitals evolution (A whole other problem in its own rights), oil & gas divisions, software & much more. This begged the question whether or not if the company was predictable or not - i.e. would they still be doing all this 50 year from now. The answer was a no. This definitely was NOT a company that any idiot could run despite being easy to understand. Yet one little tidbit just caught my mind - I had learned GE was only independent company that was still part of the Dow Jones Average of the original 12 companies. The Dow traditionally is made up of only THE BEST companies in American business, a question popped into my mind, how could a complex beast like this manage to be at the top of it's game for SUCH A RIDICULOUSLY long period? Just think of all the companies that have come & gone since 1892 yet despite 2 quick removals in the 1900's GE has remained. This is when I realized there is something unique about a company like GE that while it needs a very smart team to run it the culture of the company is what offsets that one disadvantage. Long since the passing of Thomas Edison & the first CEO Charles Coffin GE continued to thrive & expand for decade after decade. This was in part thanks to a culture of being obsessed with being the best in every industry they compete in. This culture was above just one person, it ran throughout every person at the company, had been battle tested through two world wars & I realized because of this culture it has never rested on it's laurels which allowed it to be number one. This is how the company has been able to pick such terrific officers every decade. The power of being driven and constantly challenging yourself to be better is a key to success that can be used from a huge beast like GE to the simplest child. This concept was not hard to understand.This is a stark contrast to a company like Apple, Cisco or Microsoft or Amazon which for most of them have ALWAYS had the original founder guide them through expansions and challenges. While they are terrific companies there cultures have not been tested, and when they have (like Apple during the 90's) had failed miserably. true Microsoft has not been run by Mr. Gates in decades but he has always been there to make sure the company does not lose its vision, what will happen when he is gone completely is anyone's guess. While they may be good investments at the right price (I would love to own a company like Google/Microsoft at a discount) there is nothing in any of these businesses that would suggest that a culture exists beyond the founder(s) that will prevail the challenge of time as GE has long since Coffin & Edison left the company back in the early 1900's.
To be continued.
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