Is GE back on the right track after exiting coal?

Exiting the light bulb business was the tip of the iceberg for GE, which announced its exit from the new-build coal power market earlier this week. In 2017, underperforming investment in Alstom, which is acquired in 2015, forced the company to reorganize its power business. Last year, the company ended its merger with Baker Hughes. GE Power's earnings report in January of 2019 was poor after technical glitches in its flagship HA gas turbines and weak demand for the company's cavalcade of products and services. Then in January of this year, Bloomberg News reported that GE was planning to sell its steam power segment, but no buyers have been made public yet.

What this all means for GE, its investors, and employees can be gleaned from analysts across the energy sector. The company's stock is down, so they're not happy. The company said its strategic changes will likely entail asset sales, site closings, and job cuts.

What this means for the turbomachinery sector may be nothing we don't already know. The energy industry, and the turbomachinery that underpins it, is in a state of transition, for better or worse. A confluence of trends, such as massive public and private investments in renewables across the world (most notably, hydrogen), and the drop in oil and gas demand resulting from the COVID-19 pandemic, has further forced the industry into transition. Turbomachinery manufacturers quickly adjusted, outfitting their turbines to use a more diverse set of gases, especially hydrogen.

GE's recent business decisions should come as no surprise to those who have been paying attention, as GE is far from the only company shift away from coal and towards renewables. Cutting its losses now may be the best decision it has made in a decade.