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For more than a century, General Electric was a giant of American business. It was one of the original companies in the Dow Jones industrial average, but now the company is about to be booted from the Dow and replaced by Walgreens. This is a story of the downfall of an American icon. NPR's Jim Zarroli reports.
JIM ZARROLI, BYLINE: It's no exaggeration to say GE has been an essential piece of the fabric of American business for more than a century. It was formed from a company started by Thomas Edison. And by the 1933 Chicago world's fair, it was already a famous brand.
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UNIDENTIFIED PERSON #1: Let us look within this imposing structure, into the great hall where General Electric assembled its galaxy of exhibits, electric devices and marvels of electricity.
ZARROLI: GE made engines during World War II. It made computers, oil field equipment, lightbulbs, nuclear reactors and lots of household appliances.
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UNIDENTIFIED CHORUS: (Singing) Now's the time for you to buy the General Electric blender.
UNIDENTIFIED PERSON #2: Did he say only 10 1/2 inches high?
ZARROLI: Throughout its history, GE was widely seen as a kind of weigh station for people who would rise into the highest ranks of the corporate world and sometimes beyond that.
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UNIDENTIFIED PERSON #3: For General Electric, here is Ronald Reagan.
RONALD REAGAN: Good evening. Tonight, John Forsythe stars on the "General Electric Theater." And you will see product reports that show how in the things that lead to a better life for us all...
ZARROLI: One of GE's leaders became a business legend. CEO Jack Welch preached a gospel of innovation, constant change and teamwork.
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JACK WELCH: Getting great people in all these jobs - it's the team that makes this thing happen, and so building a team is your strongest suit.
ZARROLI: Under Welch, GE expanded and diversified, going into finance, health care and insurance. It even owned NBC for a while. GE became a vast collection of unrelated businesses. It was studied in MBA schools and lionized by the business press. Aswath Damodaran is a professor of finance at NYU.
ASWATH DAMODARAN: Its reputation was of a well-run, well-managed company that somehow was able to keep all these different pieces going and going efficiently.
ZARROLI: But with time, conglomerates have fallen out of favor, and none has lost its luster like GE. Much of GE's financial power turned out to be derived from one subsidiary.
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UNIDENTIFIED PERSON #4: GE Capital is the unique industrial partner that can deliver cutting-edge financial solutions while uncovering new opportunities.
ZARROLI: But that subsidiary, GE Capital, was swept up in the housing crisis and had to be sold. What was left were a collection of middling businesses that have sometimes had trouble competing in today's tech-focused economy. Unlike his predecessors, the current CEO, John Flannery, doesn't have grand ambitions for the company. He's been selling off divisions and laying off employees. Here he was on CNBC last December.
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JOHN FLANNERY: And I think we've been quite clear about where we have underperformed and how we fix that. So going back to the past is not productive for me.
ZARROLI: The past year has been especially brutal for GE. It had to cut its dividend, and its stock price has fallen by half. Again, NYU's Damodaran.
DAMODARAN: I mean, watching GE is like watching the Bataan Death March, right? I mean, every company has a story. And at this point, GE's story is that of, you know, decline. And the end is coming. You can see it.
ZARROLI: Damodaran says with its many acquisitions, GE was able to convince investors it was a cutting-edge company. But he says, like people, companies tend to have a natural lifespan. Even the biggest ones eventually fade away. And in the end, not even good management can reverse that. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.
