GE stock hits 20-year low as asset sales gather steam

It is after weighing every option at its disposal that General Electric Company (GE), the loss-making American conglomerate, realized that getting rid of its non-core business divisions is the only way to stay afloat.  Last year witnessed GE making significant progress in asset sales, a strategy adopted by the management to focus more on the key businesses of power generation, aviation, and healthcare.

Despite the divestiture spree, the stock continued its downward spiral and hit a 20-year low on Monday and closed just above $13.

GE Healthcare on Monday agreed to sell the IT division to private equity firm Veritas Capital for about $1 billion. The transaction includes the revenue-cycle, ambulatory care, and workforce management software assets.

The sale, which is scheduled to be closed in the third quarter, is part of strengthening the healthcare platform through strategic investments in artificial intelligence and automated diagnostics. Post-acquisition, Veritas intends to position the new business as an independent company.

John Flannery has been on a mission to unlock shareholder value ever since he joined GE as CEO last year. A section of investors believes that separating the entire healthcare division, which is touted as a mismatch with GE’s core business technically, would add momentum to a potential turnaround.

The stock continued its downward spiral and hit a 20-year low on Monday and closed just above $13

There has been a growing clamor among shareholders, who are peeved by the falling market value and unimpressive financial performance, for more meaningful measures to bring the company back on track. Meanwhile, the management is working on its goal of transforming GE into a digital industrial firm.

For quite some time, GE has been exploring the sale of its locomotives and lighting divisions. The dwindling demand for its products and the resultant squeeze on cash flow has even pushed GE to the verge of exiting the Dow Jones Industrial Average.

Going by the pace at which GE is shedding flab, separation of the healthcare segment is not too far and the company would be reduced to its industrial division before long.