What's going on?

General Electric announced on Tuesday that it�ll be splitting into three separate companies, as the jack-of-all-trades continues to take social distancing guidelines admirably seriously.

What does this mean?

General Electric (GE) � which was one of the world�s biggest companies by market value until the early 2000s � has been struggling to bounce back ever since the 2008 financial crisis. That�s not for lack of trying, mind you: it�s previously sold off both its pharmaceuticals manufacturing and aircraft leasing businesses in an effort to boost its bottom line. Those moves� didn�t work. Desperate times call for desperate measures, then: GE�s planning to split up into three entirely separate companies by early 2024 � one focused on aviation, one on healthcare, and one on energy.

Why should I care?

For markets: Less might be more.
GE is a conglomerate, meaning it operates several unrelated businesses. But bigger isn�t always better: investors reckon conglomerates would be more profitable if they did just one thing well, rather than splitting their attention across multiple projects. That means GE isn�t necessarily as valuable as the sum of its parts, which is partly why it�s underperformed the US stock market by an average of 11% every year since 2009. Finally, though, that underperformance could be coming to an end: investors initially sent shares soaring by 12%.

The bigger picture: Not all splits are so simple.
Japanese conglomerate Toshiba is reportedly thinking about splitting into three separate companies too: it�s been under pressure from activist investors � those who use their significant stake in the company to influence change � to separate its infrastructure, devices, and microchip businesses. Still, that parting of ways might be trickier than GE�s: many of Toshiba�s businesses are wrapped up in issues of national security, meaning the Japanese government is likely to cast a wary eye over whoever takes control of them.