General Electric

"Buffett, after a long period of relative inactivity stretching back to the immediate aftermath of 9/11, has had one of the most active periods of his long career. Since the fourth quarter of 2008, he has deployed over $80 billion (over $15 billion of it in the first twenty-five days after the Lehman collapse) in a wide variety of investing activities: • Purchased $8 billion of convertible preferred stock from Goldman Sachs and General Electric • Made a number of common stock purchases (including Constellation Energy): $9 billion • Provided mezzanine financing to Mars/Wrigley ($6.5 billion) and Dow Chemical ($3 billion) • Bought various distressed debt securities in the open market: $8.9 billion • In Berkshire’s largest deal ever by dollar value, bought the 77.5 percent of Burlington Northern that he didn’t already own for $26.5 billion • Acquired Lubrizol, a leading, publicly traded lubricant company for $8.7 billion • Announced a sizable ($10.9 billion) new investment in IBM stock Over the same period, John Malone has been quietly conducting an extended experiment in aggressive capital allocation across the disparate entities that were spun out of TCI’s original programming arm, Liberty Media. In the depths of the financial crisis, Malone: • Implemented a “leveraged equity growth” strategy at satellite programming giant DIRECTV—increasing debt and aggressively repurchasing stock (over 40 percent of shares outstanding in the last twenty-four months). • Initiated a series of moves across the former Liberty entities, including the spin-off of cable programmer Starz/Encore and a debt-for-equity swap between Liberty Capital (owner of Malone’s polyglot collection of public and private assets) and Liberty Interactive (home of the QVC shopping network and other online entities)."

"Morgan masterminded the consolidations that produced such industrial giants as American Tele¬ phone & Telegraph, General Electric, International Harvester, United States Steel Corporation, Westinghouse Electric Corporation, and West¬ ern Union"

"Many of the United States’ most storied companies have been ailing. Detroit’s automakers, having limped along for decades, are now stumbling through the transition to electric vehicles. US Steel, General Electric, and IBM are shadows of their past selves. Intel, mired in cycles of blown product timelines and layoffs, went from a semiconductor trailblazer to a clear laggard behind Taiwan’s TSMC. After two of Boeing’s 737 MAX jets crashed in 2017, the company promised strenuous efforts to guarantee the safety of its aircraft. Then a door blew off midair in 2024. Boeing, like Intel, is constantly delaying the launch of long-planned products."

"The highest profit margins in the industrial world are in the aerospace aftermarket. General Electric makes 60 percent margins on replacement turbine blades; spare brake pads generate 70 percent margins for companies like Honeywell and United Technologies; and navigation software updates can approach 100 percent margins."

"A flagship of Starr’s early business was the American International Underwriters (or AIU), a membership association of U.S. insurance companies that held licenses to underwrite insurance in various countries, usually for other U.S. businesses. The AIU acted as agent for members in markets where they held licenses. An American industrial company, such as General Electric, needing insurance in Hong Kong, could use the AIU to write a policy by an American insurer, such as Fireman’s Fund. Having AIU act as agent meant that the member companies did not need to station substantial personnel or assets abroad but could still engage in lucrative underwriting there. Each member, an insurance company, had a percentage of the AIU pool by which its part of payments and liabilities was derived. Through the 1950s, Starr’s businesses were primarily in Asia, though he began planting the seeds for operations elsewhere around the world, including Cuba, Lebanon, Pakistan, and selected countries in western Europe. His companies acted as a general agent, writing commercial policies for U.S. insurance companies within the AIU as well as writing insurance directly in subsidiaries of Starr’s Bermuda-based holding company, American International Reinsurance Company (AIRCO). Obtaining those franchises was an extraordinary achievement, considering the relatively slow means of transportation and communication in those decades, when it could take months to transact business between Asia and the States. For example, uncertainties about liabilities and delays in payment arose because the AIU’s policies and associated claims would not necessarily become known to the insurers for months."

"How could mergers depress an economy? Davis explained as follows. Big companies combined to make bigger companies, until a few names (General Electric, DuPont, GeneralMotors, and U.S. Steel) dominated their respective industries. With these giants throwing their weight around, smaller, more innovative enterprises scrambled to survive. In the auto industry alone, a procession of car makers (Stutz, Reo, Auburn, Hupmobile, Willys-Overland, Hudson, Packard, Studebaker, and others) went bankrupt or were consumed by more powerful rivals."

"In the abandoned sheds of the former headquarters of General Electric, built in the 1920s, Luxottica has created its "digital hub," a place designed to immerse its customers in a world of high technology."

"When it came my time to speak, I conceded that after the Cable Act of 1984, cable companies had raised their rates, but instead of generating large profits, the increased cash flow was reinvested into the business, funding upgrades to cable systems and new programming. Based on our cash-flow metrics, the cable-TV industry had the lowest return on invested capital of any media or communications industry. “Years ago, we had some of the largest industrial companies in America in the business—General Electric, Westinghouse, American Express, Capital Cities—they all exited the industry over the last five or six years, and all of them cited low return on investment below their corporate objectives as their reason to exit.”"

"If business is war, and it certainly feels like it sometimes, I was thrilled we had a new weapon in digital compression, but it was not ours alone. Soon others would exploit its power, too. And as I looked at the broader North American battle map, our flank was exposed. The most immediate threat was the satellite companies—not the makers of the big ten-foot C-band dishes, but a new generation of smaller dishes and powerful satellites that could leverage digital compression from space—without the need for wires. One early gambit, called Sky Cable, promised 108 channels, twice as many channels as most cable systems back then, to a dish a mere eighteen inches in diameter—about the size of a pizza pan. The venture drew deep-pocketed backers, including General Motors’ Hughes Communications; General Electric’s NBC; News Corp., owner of 20th Century Fox Studios; and Cablevision Systems Corporation. Lucky for us, just a year later, the high-cost Sky Cable partnership imploded."