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Products: General Electric Company (GE)

Aviation(Aviation)
Healthcare(Healthcare)
Power(Power)
Renewable Energy(Renewable Energy)
Transportation(Transportation)
Oil and Gas(Oil and Gas)
Energy Connections and Lighting(Energy Connections and Lighting)
GE Capital(GE Capital)

Aviation

What is being offered?

The Aviation division of GE designs, produces, sells and services jet engines, turboprop and turbo shaft engines, and related replacement parts for use in military and commercial aircraft. It also provides maintenance, component repair and overhaul services (MRO), including sales of replacement parts for engines and repair and overhaul of engines manufactured by competitors.The segment also includes aerospace systems and equipment business, including airborne platform computing systems, power generation and distribution products, mechanical actuation products and landing gear and various engine components.

GE Aviation also produces and markets engines through 1) CFM International, a company jointly owned by GE and Snecma, a subsidiary of SAFRAN of France, and 2) Engine Alliance, LLC, a company jointly owned by GE and the Pratt & Whitney division of United Technologies Corporation. New engines are also being designed and marketed in a joint venture with Honda Aero, Inc., a division of Honda Motor Co., Ltd.

Who is buying?

Major commercial and defense aircraft manufacturers such as Boeing, Airbus, Lockheed Martin and BAE Technologies.

Competitors:

Major competitors of GE Aviation are Pratt & Whitney, Rolls-Royce, Safran and Honeywell.

What buyers care about:

1. Price

2. Fuel efficiency

3. Lower emissions and engine noise

4. Service network and parts availability

5. Reliability

Top selling points:

GE Aviation Systems is a key supplier on several Boeing and Airbus models including, the Boeing 787 Dreamliner, Boeing 747-8, Boeing 737MAX, Airbus A330 and Airbus A320.

Several of its engines are considered to give the highest fuel efficiency standards along side low noise levels in their class. In addition, the strategic joint ventures with Safran of France called CFM International, and with Pratt % Whitney called Engine Alliance further boosts the product and sales portfolio of GE.

 

Aviation Revenues

Aviation Revenues represents the revenue of GE from the sale of jet engines, turboprop and turbo shaft engines, and related replacement parts for use in military and commercial aircraft.

GE's Aviation Revenues grew strongly in the last few years to reach $26.2 billion in 2016 from $21.6 billion in 2013.

Chart: Aviation Revenues

Healthcare

What is being offered?

The Healthcare division manufactures, sells and services a wide range of medical equipment.

1. Diagnostic & clinical equipment: This includes magnetic resonance (MR), computed tomography (CT) and positron emission tomography (PET) scanners, x-ray, nuclear imaging, digital mammography and molecular imaging equipment.

2. Molecular medicine: This includes diagnostic imaging agents used in medical scanning procedures, drug discovery, biopharmaceutical manufacturing and purification, and tools for protein and cellular analysis for pharmaceutical and academic research.

3. Information technology & services: This includes remote diagnostic and repair services for medical equipment manufactured by GE and others, as well as computerized data management, information technologies and customer productivity services.

Who is buying?

Hospitals, clinical laboratories, medical institutes and governments.

Competitors:

Siemens Healthcare, Braun, Hitachi, Toshiba, Philips Electronics, Johnson & Johnson, Abbott Labs

What buyers care about:

1. Price

2. Quality of equipment

3. Inter-operability and ease of use

4. Lower operating and maintenance costs

GE Healthcare Services Revenue

GE Healthcare Services Revenue represents the revenue of GE Healthcare from the sale of services of GE Healthcare division.

GE Healthcare Services Revenue has remained roughly flat during the last few years, and stood at $7.84 billion in 2016.

GE Healthcare Equipment Revenue

GE Healthcare Equipment Revenue represents the revenue of GE Healthcare from the sale of services of GE's medical pieces of equipment.

GE Healthcare Equipment Revenue increased marginally from $10.1 billion in 2013 to $10.4 billion in 2016 due to its expansion in Asia Pacific.

Chart: GE Healthcare Services Revenue

Chart: GE Healthcare Equipment Revenue

Healthcare CapEx % of Revenue

Capital Expenditures (capex) are cash expenditures by the company to purchase, repair or upgrade physical assets such as property, buildings or equipment. We forecast division wide capital expenditures using capex as a percentage of division revenues.

Healthcare CapEx % of Revenue has fluctuated in recent years and stood at 0.9% in 2016.

Chart: Healthcare CapEx % of Revenue

Power

What is being offered?

GE's Power segment provides products and technologies that harness resources such as oil, gas and water to produce electric power.

Power segment sells gas turbines and generators that are used principally in power plants for generation of electricity. It is also a leading provider of Integrated Gasification Combined Cycle (IGCC) systems, which convert coal and other hydrocarbons into synthetic gas that is used as the primary fuel for gas turbines in combined-cycle systems. This produces fewer air pollutants compared with traditional pulverized coal power plants. The Power segment also sells steam turbines and generators to the electric utility industry and to private industrial customers for cogeneration applications. It also offers wind turbines, aircraft engine derivatives for use as industrial power sources, and nuclear reactors, fuel and support services for both new and installed boiling water reactors through joint ventures with Hitachi and Toshiba. GE Power also provides customers with a broad portfolio of aftermarket services, including equipment upgrades, long-term maintenance service agreements, repairs, equipment installation, remote monitoring, performance testing and diagnostics.

GE Power also offers water treatment solutions for industrial and municipal water systems including the supply and related services of specialty chemicals, water purification systems, pumps, valves, filters and fluid handling equipment for improving the performance of water, waste water and process systems, including mobile treatment systems and desalination processes.

Who is buying?

Buyers mainly include power plant operators, electrical utilities, industrial companies and governments.

Competitors:

Competitors for GE's energy division include global energy equipment companies such as ABB, and Siemens Energy.

What buyers care about:

1. Price

2. Lower emissions

3. Higher availability and load handling capacity

4. High fuel efficiency

Top selling points:

GE's Power segment benefits from a diversified product portfolio and a commitment to R&D which allows it to produce innovative and unique products. The division's renewables portfolio has seen good growth in last 5 years and the company expects that it will contribute significantly to its future growth.

As the world moves towards lower emissions and environmentally friendly power generation, we expect that customers will be drawn to GE's innovative products.

GE Power Equipment Revenue

GE Power Equipment Revenue represents the revenue of GE Power from the sale of GE Power equipment.

GE Power Equipment Revenue declined from $9.58 billion in 2013 to $7.80 billion in 2015 but increased back to $9.63 billion in 2016 due to the acquisition of Alstom's energy business. However, GE's power equipment revenues declined in 2017 year to date, due to operational issues which are likely to continue in 2018.

GE Power Services Revenue

GE Power Services Revenue represents the revenue of GE Power from the sale of services of GE Power.

GE Power Services Revenue has increased over the last few years, amounting to $17.1 billion in 2016. The steep increase in services revenues in 2016 was driven by GE-Alstom join venture. However, GE's power services revenues declined in 2017 due to operational issues which is likely to continue in 2018.

Chart: GE Power Equipment Revenue

Chart: GE Power Services Revenue

Power Capex as % of Revenue

Capital Expenditures (capex) are cash expenditures by the company to purchase, repair or upgrade physical assets such as property, buildings or equipment. We forecast GE's Power segment's capital expenditures by expressing them as a percentage of its revenues.

Power Capex as % of Revenues fluctuated in the last few years and stood at 1.09% in 2016.

Chart: Power Capex as % of Revenue

Renewable Energy

What is being offered?

GE's Renewable Energy segment was formed in 2015 which primarily constitutes of GE's hydro, onshore and offshore wind turbine division. This segment provides products and services that makes renewable power sources affordable, accessible, and reliable.

GE completed the acquisition of majority of Alstom SA's energy business for $13.5 billion in November 2015. This is the company's largest industrial investment so far and is expected to significantly expand industrial portfolio and footprint. On successful integration of the two companies' operations, GE expects big cost synergies primarily from SGA consolidation and improved manufacturing capabilities.

GE Power's Onshore wind division along with Alstom's SA's energy business was put together to form a new segment called GE renewable energy in 2015. GE Renewable Energy segment sells wind turbine platforms, offshore wind turbine, hardware and software to optimize wind and hydro resources. GE Renewable Energy segment also provides full range of solutions, products and services to serve the hydropower industry from initial design to final commissioning, from Low Head / Medium / High Head hydropower plants to pumped storage hydropower plants, small hydropower plants, concentrated solar power plants, geothermal power plants and biomass power plants.

Who is buying?

Buyers mainly include power plant operators, electrical utilities, industrial companies and governments.

Competitors:

Competitors for GE's Renewable Energy division include global energy equipment companies such as Vestas, Goldwind and Siemens Energy.

What buyers care about:

1. Price

2. Efficiency

3. Service network and parts availability

4. Reliability

GE Renewable Energy Services Revenue

GE Renewable Energy Services Revenue represents the revenue of GE Renewable Energy from the sale of services of GE Renewable Energy.

GE Renewable Energy Services Revenue has increased over the last couple of years amounting to $901 million in 2016.

GE Renewable Energy Equipment Revenue

GE Renewable Energy Equipment Revenue represents the revenue of GE Renewable Energy from the sale of GE's onshore and offshore wind turbines.

GE Renewable Energy Equipment Revenue increased from $4.48 billion in 2013 to $8.11 billion in 2016 driven by the acquisition of Alstom's energy businesses by GE in 2015.

Chart: GE Renewable Energy Services Revenue

Chart: GE Renewable Energy Equipment Revenue

Transportation

What is being offered?

Transportation manufactures high-horsepower, diesel-electric locomotives, including the Evolution Series™, which meets or exceeds the U.S. Environmental Protection Agency’s Tier III requirements. The segment also offers leading drive technology solutions to the mining, transit, marine and stationary, and drilling industries. On November 30, 2012, the segment completed the acquisition of Industrea Limited, a provider of mining products and services with a focus in underground mining.

Apart from these products, Transportation provides a portfolio of service offerings designed to improve fleet efficiency and reduce operating expenses, including repair services, locomotive enhancements, modernizations, and information-based services like remote monitoring and diagnostics.

Who is buying?

Railway operators, governments, mining companies and contractors.

Competitors:

Bombardier, Alstom, Siemens, Kawasaki, Caterpillar, China South Locomotive and Rolling Stock, China Northern Locomotiveand Rolling Stock

What buyers care about:

1. Price

2. Fuel efficiency

3. Lower emissions

4. Maintenance and repair services

GE Transportation Services Revenue

GE Transportation Services Revenue represents the revenue of GE Transportation from the sale of services of GE Transportation.

GE Transportation Services Revenue has declined in the last few years due to the continued weakness in resource and mining industry.

GE Transportation Equipment Revenue

GE Transportation Equipment Revenue refers to the total sales of GE's transportation equipment. This segment includes the sale of equipment for passenger and freight rail equipment, railway signaling equipment, infrastructure and related services.

GE Transportation Equipment Revenue rose marginally from $3.08 billion in 2013 to $3.14 billion in 2015 before falling to $2.26 billion in 2016.

Chart: GE Transportation Services Revenue

Chart: GE Transportation Equipment Revenue

Oil and Gas

What is being offered?

The Oil & Gas division supplies equipment to the global oil and gas industry, used in applications spanning the entire value chain from drilling through production, liquefied natural gas (LNG) and pipeline compression, pipeline inspection, and downstream processing in refineries and petrochemical plants. It designs and manufactures surface and subsea drilling and production systems, equipment for floating production platforms, compressors, turbines, turboexpanders, high pressure reactors, industrial power generation and a broad portfolio of auxiliary equipment used in the oil and gas industry. It also offers equipment services through its over 40 service centers and workshops in the world’s main oil and gas extraction and production regions.

Who is buying?

Major integrated oil & gas companies, independent oil & gas exploration and drilling companies, private industrial companies.

Competitors:

Competitors for GE's oil & gas division include companies such as Baker Hughes Inc, Schlumberger, Halliburton and National Oilwell.

What buyers care about:

1. Price

2. Drilling range in feet; drilling depths for land rigs ranges from 5,000 to 30,000 feet

3. Availability of equipment

4. Service center network of manufacturer: Buyers obviously prefer manufacturers that have service centers nearby, so a global network is beneficial.

GE Oil and Gas Services Revenue

GE Oil & Gas Services Revenue represents the revenue of GE Oil & Gas segment from the sale of services of GE Oil & Gas segment.

GE Oil & Gas Services Revenue has increased from over the last few years but fell significantly in the last couple of years to stand at $6.82 billion in 2016.

GE Oil and Gas Equipment Revenue

GE Oil & Gas Equipment Revenue represents the revenue of GE Oil & Gas segment from the sale of of GE Oil & Gas equipment.

GE Oil & Gas Equipment Revenue declined from $9.79 billion in 2014 to $6.04 billion in 2016 due to the weakness in the oil industry and the pricing pressure.

Chart: GE Oil and Gas Services Revenue

Chart: GE Oil and Gas Equipment Revenue

Energy Connections and Lighting

What is being offered?

Energy Connections & Lighting sells and services major home appliances including refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens, room air conditioners, residential water systems for filtration, softening and heating, and hybrid water heaters. The company's brands include GE Monogram, GE Cafe, GE Profile, GE Artistry and Hotpoint.

In 2016, GE merged its energy management with appliances and lighting business which provides integrated electrical products and systems used to distribute, protect and control energy and equipment. It manufactures electrical distribution and control products, lighting and power panels, switchgear, and circuit breakers that are used to distribute and manage power in a variety of residential, commercial and industrial applications. It also provides advanced products and services that modernize the grid, from the power plant to the power consumer, such as protection and control, industrial strength communications, smart meters, monitoring & diagnostics, visualization software and advanced analytics. Energy Management also provides plant automation, hardware, software and embedded computing systems including advanced software, controllers, single board computers, motion control and operator interfaces.

Appliances & Lighting also manufactures, sources and sells a variety of lamp products for commercial, industrial and consumer markets, including full lines of incandescent, halogen, fluorescent, high-intensity discharge and light-emitting diode products.

Who is buying?

Retail outlets, residential building contractors, retail customers, electrical utilities, industrial companies, and governments.

Competitors:

Siemens, Philips, LG Electronics, Samsung, IFB, Whirlpool, global energy equipment companies such as ABB, ALSTOM, and Siemens Energy.

What buyers care about:

1. Price

2. Performance and quality

3. Lower power consumption

4. Aftermarket services

5. Efficiency and load handling capacity

Appliances and Lighting Revenues

Appliances & Lighting Revenues represent the revenues from the sales of GE's home appliances including refrigerators, freezers, electric and gas ranges, cooktops, dishwashers, clothes washers and dryers, microwave ovens.

Appliances & Lighting Revenues remained rangebound between $15 to $16 billion in the last few years.

Chart: Appliances and Lighting Revenues

GE Capital

GE Capital is the financial services business of GE and includes Commercial Lending and Leasing, Energy Financial Services, GE Aviation Services, Insurance and Others.

The Commercial Lending and Leasing division offers capital and services to industries served by GE, such as the healthcare industry through Healthcare Equipment Finance arm. The CLL business also provides factoring solutions through its Working Capital Solutions business to GE's equipment businesses by purchasing GE customer receivables. The Energy Financial Services division invests in long-lived, capital intensive energy projects and companies by providing structured equity, debt, leasing, partnership financing, project finance and broad-based commercial finance. GE Aviation Services offers commercial aircraft financing and leasing for a wide range of aircraft types and financing options.

As a result of the GE Capital Exit Plan, GE Capital's Real Estate business, Consumer business and most of its CLL business are classified as discontinued operations and are no longer reported as part of GE Capital. All comparative prior period information has been reclassified to reflect this change.

Who is buying?

1. Commercial Lending and leasing: Retailers, individuals, automotive dealers, small and medium enterprises.

2. GE Aviation services: Aircraft manufacturers, airlines, MRO operators

3. Energy Financial Services: Power plant operators, power companies, industrial companies, governments.

Competitors:

Competitors for GE Capital division include various types of financial institutions, including commercial banks, investment banks, leasing companies, independent finance companies, finance companies associated with manufacturers and insurance and reinsurance companies.

What buyers care about:

1. Interest rates and fees

2. Financing terms and eligibility criteria

3. Distribution network of the financier and its tie-ups with manufacturers

4. Aircraft delivery dates, condition and availability

5. Expertise in the related field

GE Capital Total Assets

This represents the total assets of the Capital division of GE, comprising primarily of receivables related to loans outstanding and leased equipment.

GE Capital Total Assets declined gradually from $585 billion in 2011 to $501 billion in 2014. The figure declined sharply to $183 billion in 2016 due to the sale of most of the financial services assets under GE Capital exit plan.

Return on GE Capital Portfolio

Return on GE Capital Portfolio represents the ratio of total GE Capital revenues and GE Capital total assets.

Return on GE Capital Portfolio increased steadily from 2.1% in 2011 to 5.94% in 2016.

Chart: GE Capital Total Assets

Chart: Return on GE Capital Portfolio