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A quote from an article about fresh water and its supply got me interested in GE's projects with water purification:
When viewed from space the Earth is a magnificent blue planet which seems to have a limitless supply of water and in fact 70% of the surface is covered by water. The problem is that most of this is salt water, located mainly in oceans and seas. Only 3% of the water is fresh water, safe for drinking. However, most of this is unavailable for use with 3/4 of all freshwater being part of the frozen ice caps and glaciers. What remains is 1% and of this a full 2/5 are tied up in America's Great Lakes and Russia's Lake Baikal.
GE Water & Process Technologies (the division of GE that specializes in water-related products) offers water purification chemicals, water purification equipment (this is what is used to filter sea water, removing odor and color, etc.), and lab-related products. The thing that I've been interested in is exactly how much GE has invested in water purification. A "clue" is that in March, GE purchased Canadian water company Zenon Environmental for $656 million, which sounds like a lot, but not when compared to the size of General Electric as a whole (337.88B market cap). I'm looking at this from two aspects. Is GE leading in water purification, and if so, if the water purification industry takes off, will it help GE a considerable amount? Another "clue" is that GE bought Ionics, a company engaged in several water purification services, in 2004 for approximately $1.1 billion, which doesn't include Ionics debt.
I still haven't been able to find an exact number, but after looking through past articles, I think GE's water segment would be valued somewhere around $5 billion, which is a great amount to have invested in a budding industry. GE has also upped its investments in India and China, which will be great to continue its slow and steady growth pace. The thing that is really admirable about GE is that they can manage so many different companies, in a whole range of sectors and industries, with the same integrity. This will help them a great amount over the long-term as they enter new industries and acquire more great businesses.
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Reader Comments (Page 1 of 1)
8-03-2006 @ 7:48PM
Investorial said...
I was following Zenon for quite a while. I believe it's a good acquisition for GE. Zenon was winning contracts left and right, and managing an impressive backlog of contracts. The acquisition should also help Zenon.
I'm just glad I was able to profit several times when investors overreacting to some earnings report and sell off when it reached my targetted valuation.
In this day and age where water at times can cost more than oil, it's a socially responsible line of business to consider.
8-04-2006 @ 8:38AM
dave said...
Tough to figure out why GE stock has been stuck in the mud for so long. They have a great core of businesses that all seem to do very well. And adding new businesses that are doing well - water and homeland security. So why doesn't the stock ever move?