Name: Why Conglomerates Split Up | WSJ
Uploaded: 2022-09-14T08:55:25.000Z
Duration: 5 min 53 s
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- [Narrator] In November, Johnson & Johnson,

centered on healthcare, power and aviation.

The splintering of these two heavyweights

even as tech companies continue to consolidate.

of the corporate conglomerate as we've know it.

- [Narrator] Here's what led to the latest wave

The breakup of conglomerates isn't a new phenomenon.

- The rationale for industrial conglomerates

- [Narrator] Jason Zweig has been covering investing

and financial history for The Wall Street Journal

to work for a while until the market got overheated.

and people learned that these businesses rise

One of the things that happened in the 1980s

is that we had the rise of the leveraged buyout movement,

which today we would call private equity.

which they could use to buy undervalued assets.

So a lot of conglomerates chose that particular time

to decline in popularity in the 1990s and 2000s.

- [Reporter] The Dow tumbled more than 500 points

after two pillars of the street tumbled over the weekend.

of the remaining industrial conglomerates.

Investors led a push to break up bigger companies

to be underperforming independent rivals.

the German multinational technology giant saw

it shed its healthcare and energy businesses,

shifting from a conglomerate into a company focused

on higher margin software and technology.

Since then, Siemens' market capitalization

For years, GE, one of America's oldest industrial giants

- The company was engaging in some aggressive accounting

was taking risks that really did not pan out

GE faced pressure, both internally and externally

to split after parts of its business continued

- Certainly management was under enormous pressure

Meanwhile, they were under enormous pressure

GE began selling off portions of its business,

- General Electric is selling NBC Universal

- [Narrator] And its majority stake in oil and gas.

marking the end of an era for the industrial titan.

This was just days before Johnson & Johnson,

the world's largest health products company by sales

Johnson & Johnson's CEO said the company decided

customers and markets have diverged so much

a pattern that accelerated during the pandemic.

where like GE, they felt they could be more efficient

and each unit could get the full attention it deserved

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Why Conglomerates Split Up | WSJ

individual

phenomenon

enormous

majority