GE in Russian Joint Ventures - Analyst Blog

General Electric Co. (GE) entered into joint ventures in Russia with two companies, Russian Technologies and INTER RAO UES, to develop the country's energy and healthcare sector. The companies did not reveal the financial details of the agreement, signed in Moscow.

Through the venture, the companies (all three) will construct, combine, sell and service energy-efficient heavy-duty gas-fired power generation turbines in Russia. Moreover, GE and Russian Technologies plans to jointly serve the healthcare needs of the country through building, assembling, selling and servicing high-tech medical diagnostic devices.

The government in Russia is committed to modernizing its aging technologies in energy infrastructure and healthcare system, two of the most important sectors for development of a region. The machineries needed for the modernization will be initially imported from GE's sites outside Russia or other suppliers until local production unit are built in the country.

General Electric has one of the best infrastructure franchises worldwide with solid organic growth rates, exposure to favorable secular trends and a large installed base supporting a growing annuity-like service business.

Infrastructure businesses of the company are helping to build energy, health, transportation and technology infrastructure of the new century. These businesses provide products and services that help the developing regions to participate in the global economy, while also assisting the developed regions to upgrade with cleaner, more efficient and better infrastructure technologies.

However, the company's global expansion is subject to economic and political risks pertaining to various operating geographies.

Operating in more than 100 countries globally and employing about 300,000 people worldwide, General Electric Co. is a diversified infrastructure, finance and media company.  Within the energy sector, the company aims to develop and install technology for the efficient use of natural resources. Major competitors of General Electric are Honeywell International Inc. (HON), Siemens AG (SI) and United Technologies Corp. (UTX).

We currently maintain our Neutral rating on General Electric, with a Zacks #3 Rank (short-term Hold recommendation).