Lights Out: Pride, Delusion, and the Fall of General Electric

by Thomas Gryta

FLANNERY PAINTED A dire picture. It would take years to fix some of the company’s businesses, with most of the work needed in Power, and he was going to cut the dividend in half, saving $4.2 billion a year. Immelt would not have made this move. Flannery also slashed Immelt’s financial targets for the next year, finally euthanizing the delusions of $2 a share in earnings. The new boss cautioned that conditions in 2019 would also be difficult. He called 2018 “a reset year” for GE. Flannery wanted to focus on three core divisions—Power, Aviation, and Healthcare—and exit most of the rest of GE’s operations. As the Journal had reported weeks earlier, GE would sell its transportation division, one of the oldest and biggest makers of diesel locomotives. It also hoped to finally sell GE Lighting, as it had been trying to do for years without luck. Both divisions traced their roots all the way back to Thomas Edison. Flannery was also shedding one of Immelt’s biggest and most disastrous projects, the oil and gas business. The years of deals had been poorly timed, and the service side of the industry was now dominated by two giant companies, Schlumberger and Halliburton. It wasn’t Immelt’s fault that the entire oil sector had turned south. But he was responsible for GE investors being so openly exposed to the collapse. Just months after merging the oil and gas division with Baker Hughes into a new company, GE would look to sell its two-thirds stake in the $40 billion company. In a so...