GE Has Come a Long Way From Edison’s Lab
The century-old General Electric Co.--which began in 1889 as the brainchild of light bulb inventor Thomas Alva Edison and blossomed into one of America’s original industrial giants--approaches the end of 1985 as one of the world’s largest, most diversified and cash-rich corporations.
The consumer products and defense giant, Wednesday announced a definitive merger agreement with RCA Corp. in a deal valued at $6.28 billion. GE said it would pay $66.60 a share for RCA common stock.
The Fairfield, Conn.-based firm makes refrigerators and factory robots, light bulbs and jet engines, diesel locomotives and advanced CAT scan X-ray devices; it generates electricity for cities with power plants and capital for venture loans through its credit division, and it is the nation’s fourth-largest defense contractor and ninth-largest industrial firm.
At the close of 1984--a year in which GE posted sales of $28 billion--its cash reserves exceeded $2.3 billion. For more than a year, speculation about how GE might spend its cash has been the sport of Wall Street.
Speculation about GE’s anticipated acquisition plans recently prompted rumors, for example, that the company might be the white knight to buy CBS when the television network resisted the takeover bid of Ted Turner. Unfounded reports that GE was considering a possible merger with Litton Industries also spurred an $11-per-share jump in the Beverly Hills-based company’s stock two months ago.
In one acquisition attempt last week, however, British telecommunications giant, Plessey Co., rejected GE’s $1.74-billion takeover bid, saying that it was not in its shareholders’ interests.
Since becoming chairman in 1981, GE’s John F. Welch Jr. has presided over a reorganization that included divestiture last year of coal mining properties in Utah and its line of small household appliances, which it sold to Black & Decker for $300 million. A dozen of the company’s 217 plants have been closed and more closures are planned.
Such moves have helped GE’s bottom line. Although revenues have been flat since Welch moved into the top job, earnings have increased each year. Last year earnings were a record $2.28 billion, up from $2 billion in 1983, and represented an 8.2% net income on sales for the year.
All has not been well, however, for the company that grew out of Edison’s light bulb invention. The company was originally called Edison General Electric Co., a consolidation of many of Edison’s enterprises, including electric power.
Earlier this year, the company pleaded guilty to defrauding the government of $800,000 on a Minuteman missile project and was fined the maximum $1.04 million on top of an order to repay the $800,000.
