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Siemens and the lessons for GE

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Hospital scanner or a time machine? GE needs both to catch up to Siemens. Source: Bloomberg

GE and Siemens are two conglomerates, which operate roughly in the same markets but in different time zones – about four years apart.

CEO Joe Kaeser became head of the German engineering giant on August 1, 2013, after his predecessor had to issue several profit warnings. Exactly four years later John Flannery replaced Jeffrey Immelt on August 1, 2017, as GE’s boss after investors were dissatisfied with business and stock developments.

Soon after Mr. Kaeser, Siemens’ former finance head, took the reins he launched a series of divestments and acquisitions that is morphing the 170-year-old firm more and more into a holding company rather than a conglomerate. That dealmaking includes an initial public offer of the company’s medical scanners and laboratory equipment division, Healthineers, which could list on the Frankfurt stock exchange by April and be worth as much €40 billion ($50 billion). It would follow the same route as other Siemens’ spin-offs, for instance wind turbine maker Siemens Gamesa, and the planned merger of Siemens Mobility with French peer Alstom.

When Mr. Flannery took over from Mr. Immelt, he immediately said he would scrutinize GE’s portfolio, which includes the production of healthcare equipment, airplane engines, lightbulbs and hydro generators. In November, during an investor update, he said GE would make a “strategic review” of almost all its major businesses. Effectively, Mr. Flannery said he might break up the group and follow in Siemens’ footsteps.

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