It’s always tough when company decides to abandon its industrial heritage. Oftentimes pushback comes from employees, customers, suppliers, and even the general public.
Will it be different for General Electric? According to The Wall Street Journal, the iconic, Boston-based conglomerate has hired bankers to help it get rid of its consumer-lighting business, which formed the basis for its founding 125 years ago by Thomas Edison, who is credited with inventing the first incandescent lamp.
Lightbulbs were the revolution of their time, bringing to ordinary people (along with electricity) the ability to read, write, play cards and do all sorts of things that needed visible light long after the sun went down. For decades they were a cash cow for GE, enabling the company to fund expansion into other business like appliances, jet engines, medical equipment, and finance.
But like so many other things, technology has done in the original Edison lightbulb. Incandescent bulbs emit light by heating a wire filament, typically tungsten, to a high-enough temperature to produce light. The filament doesn’t immediately burn up because it’s encased in a glass bulb filled with inert gas. While such lights are cheap to make, they are far less efficient than newer lighting technologies such as fluorescent lamps and LEDs, or light-emitting diode lamps. Because of their inefficiency, many jurisdictions including Canada, the EU, and the US are phasing out incandescent lighting.
GE has been gradually consolidating its lighting business, one of its few remaining consumer-product businesses, over the last several years. A year ago, Bloomberg reported that GE was open to selling the lighting business after the company agreed to sell its major appliances division to China’s Qingdao Haier for $5.4 billion. Rivals Siemens and Royal Phillips have also gotten out of lightbulbs. GE closed its last US factory making tungsten-filament incandescent bulbs in 2010.
The Journal report, quoting “people familiar with the matter,” said the business could sell for as much as $500 million. The company would retain its Current business, which makes commercial LED lights. The entire lighting business generated about $2.2 billion in revenue last year, less than 2% of GE’s total.