If you’re a senior Fool, you likely recall a time when a mention of General Electric Company (NYSE:GE) conjured up thoughts of electric light bulbs, dishwashers, and even vacuum cleaners. Today, both you and more recent Foolish additions are probably less certain about what precisely constitutes the big company.
Let’s then take a quick tour of the industrial and financial behemoth. Its largest industrial segment is power and water; as such, it manufactures numerous verities of turbines and generators, including wind turbines and solar technology. Unfortunately, that unit was but one of seven non-financial units to experience declines in both revenues and earnings during the past quarter.
Other General Electric Company (NYSE:GE) segments turn out jet engines, health care diagnostic and monitoring equipment, freight and passenger locomotives and diesel engines. Those industrial lines led to $25.2 billion in revenues for the second quarter of this year. Then, of course, there’s GE Capital, which generates about $11 billion a quarter in revenues through its commercial loans, fleet management, credit cards, and personal loans.
Focus on traditional energy
To my way of thinking, the real emerging intrigue in the company lies in its oil and gas segment. The unit cranks out an expanding array of technologically sophisticated systems and equipment for the world’s increasingly challenging quest for oil and gas.
In the June quarter, the oil and gas segment generated 16% of total industrial revenues, in the process expanding its contribution to the corporate total by 9% year over year, and to its profit by a healthy 14%. Today, from a revenue expansion perspective, the unit is the fastest-growing industrial operation in the company.
That trend clearly won’t be reversed during the current quarter, since earlier this month, Texas-based lift equipment (pumps) manufacturer Lufkin Industries was added to General Electric Company (NYSE:GE)’s oil and gas repertoire. For about $3.3 billion, Lufkin will likely return in excess of $1.3 billion in annual revenue to General Electric Company (NYSE:GE).
A wide oil and gas array
For now, General Electric Company (NYSE:GE)’s range of oil and gas products includes enhanced oil recovery solutions, drilling equipment for both land and offshore, refinery and petrochemical products and components, and measurement and sensing devices. In addition, perhaps its most technologically advanced offerings are found in its full range of liquefied natural gas processing equipment and its subsea solutions, which include blowout preventers and equipment for the rapidly expanding world of activity at the bottom of the sea.
Meaningful competition in the subsea will almost certainly come from OneSubsea, a joint venture that has recently been established by Cameron International Corporation (NYSE:CAM) and Schlumberger Limited. (NYSE:SLB). From an ownership perspective, the partnership tilts 60% to Cameron International Corporation (NYSE:CAM), 40% for Schlumberger Limited. (NYSE:SLB). It’s likely that an impending battle is shaping up between the technologically advanced owners of OneSubsea and General Electric Company (NYSE:GE) that will hasten the fast-accelerating significance of the subsea realm.