quote:
GE to Reorganize Into 6 Business Units
Conglomerate Names Three Vice Chairmen
The Wall Street Journal Online 06/23/05
General Electric Co. said it will reorganize its 11 businesses into six industry-focused groups and shuffled its top executives.
The Fairfield, Conn., conglomerate named three new vice chairmen as part of the broad restructuring, which GE said aims to align its businesses for "growth and customer focus." GE also reiterated its second-quarter and full-year earnings guidance, saying the company is in "great shape."
The realignment is the first significant organizational change GE has made since Jeffrey Immelt took over as chairman and chief executive in 2001. Under the changes, GE's six operating units will be: GE Infrastructure; GE Industrial; GE Commercial Financial Services; NBC Universal; GE Healthcare; and GE Consumer Finance.
GE, the largest U.S. company by market capitalization, said the new vice chairmen will lead three of the businesses: Dave Calhoun, 48 years old, will lead Infrastructure; Michael Neal, 52, Commercial Financial Services; and John Rice, 48, Industrial. Current Vice Chairman Dennis D. Dammerman will retire at the end of the year, ending his 38-year run at the company. Mr. Dammerman helped build GE's financial-services unit.
"These changes will accelerate GE's growth in key industries," Mr. Immelt said in a statement. "We have been moving toward a more customer-focused organization for several years," he said.
Younger Senior Team
The new appointments give Mr. Immelt a younger senior team of executives who, like him, have risen through operations and can offer counsel on how to grow some of GE's biggest and most important businesses and make them more technology driven. Mr. Immelt wants GE to be viewed as a high-technology, rather than old industrial, company.
The promotions also are aimed at retaining executives who are continually wooed for CEO posts elsewhere. For instance, Mr. Calhoun, the head of the new infrastructure division and a confidant of Mr. Immelt's, has been seen as a leading candidate for the chief-executive position at Boeing Co.
The changes will be effective July 5. The three new vice chairmen, all promoted from divisional chief executive or president positions within the company, will also serve as advisers to the board, GE said. Mr. Immelt also said he believes the company can save $200 million to $300 million through the reorganization.
New Units
Under the reorganization, GE Infrastructure will include Aircraft Engines, Rail, Energy, Oil & Gas, and Water, the company said. GE said the news structure will accelerate progress in developing markets such as China, India and the Middle East.
Commercial Financial Services will include Commercial Finance and Insurance, the company said. GE Industrial will include Plastics, Silicones/Quartz, Consumer & Industrial, Security & Sensors, Automation, and Equipment Services.
In GE Healthcare, Joe Hogan was named president and CEO. He will succeed Bill Castell when Mr. Castell retires in 2006, GE said. The Healthcare business will continue to be based in London, it said. The operating structures of NBC Universal, led by GE Vice Chairman Bob Wright, and Consumer Finance, led by Dave Nissen, are unchanged, the company said.
Mr. Immelt also announced that GE Vice Chairman Dennis D. Dammerman, who has been with GE for 38 years, will retire at the end of this year.
GE is making the organizational changes "at a time of strength," Mr. Immelt said. "Our company is in great shape and positioned for continued double-digit earnings growth," he said.
Mr. Immelt said GE is "on track to hit our earnings estimates" of 43 cents to 45 cents a share for the second quarter and $1.78-$1.83 a share for the full year. "We see continued double-digit growth into 2006 and beyond," he added.
Mr. Immelt also said the changes announced Thursday would enhance the company's financial transparency by providing key financial data for significant units within the six businesses.
