A GEnx jet engine on the plant floor. Photo credit: GE.

General Electric ( NYSE: GE ) is one of the largest and oldest companies on the market, yet in recent years GE has undergone a transformation in its business more reminiscent of a young, agile start-up. Since the recession, GE has worked to update its history as an innovator for the 21st century, championing emerging technology to drive future performance and decreasing the company’s reliance on its risky financial services unit, GE Capital. As third quarter earnings demonstrated Friday, these efforts are paying off. After management announced a record backlog of orders in industrial products and services, strong growth in industrial profits, and an ever smaller and more manageable GE Capital, shares in General Electric stock surged Friday to their highest point in over five years, since the start of the recession.

Five years ago, General Electric’s financial services business had come to dominate the company, contributing over 40% of both revenue and earnings, more than any other operating segment. With a massive portfolio of financial assets, not to mention majority ownership of NBC Universal, General Electric didn’t quite look like the energy infrastructure provider and manufacturer it once had.

The recession underlined how far GE had strayed, as overexposure to the financial sector, which had little on the surface to do with the company’s historic businesses, created liquidity concerns that forced the company to slash its dividend by two thirds, issue new stock which diluted the share count by about 6%, and lose its vaunted AAA credit rating.Before the crisis, CEO Jeffrey Immelt had already signaled his intention to tame GE’s financial services, selling off underperforming insurance businesses, but when GE Capital threatened the entire corporation during the recession, management found added urgency to de-emphasize the finance business.

Progress on that front has been steady. In the third quarter of 2013, revenue from GE Capital fell 5% since 2012, making up under 30% of sales. That was due to the intentional reductions in GE Capital’s assets by 7%. Profits actually rose by 13%, but solid earnings growth in the industrials businesses over the past few years still saw the share of profits contributed by GE Capital fall since 2008 to around 30%. Shrinking revenues for GE Capital were nothing new in the third quarter, as over the years General Electric has sold off progressively more of the unit’s financial assets and products, both to reduce the company’s exposure to financial markets and to raise money to reinvest in the company’s industrial businesses.

And invest they have. Over the past few years, General Electric has deploys tens of billions in building up its industrial businesses. To support its Aviation business, it recently closed on its $4.3 billion acquisition of Avio, an Italian company that provides jet engine components to GE Aviation. General Electric also recently completed the acquisition of oil & gas equipment manufacturer Lukfin Industries for $3.3 billion, just the latest in a string of major investments in the industry. GE has put more than $11 billion into its Oil & Gas unit since 2007. These investments have allowed GE Oil & Gas, which was earning $300 million in profits on $3 billion in revenue in 2007, to balloon to around 10% of GE’s overall business. In the third quarter alone, GE Oil & Gas earned $520 million on $4.3 billion in revenue, representing an annualized sixfold increase in profits for the unit.

While GE continues to invest in major business lines, it is also cultivating emerging technologies it hopes will drive growth in the future. General Electric has been putting its weight behind an initiative to improve the productivity and efficiency of its machines through a networked data collection and analysis program. GE believes this Industrial Internet could boost global GDP by $10 trillion to $15 trillion annually. This technology is still in a nascent stage, but in the third quarter earnings call Jeff Immelt announced that orders for the program should exceed $500 million. GE has also invested in 3D printing, a technology that allows manufacturers to create unique, highly detailed designs by printing out successive layers of materials like plastics or metal and heating, curing, or gluing the layers into place. The company is already creating critical components with the technology, and GE believes 3D printing could influence half of its manufacturing over the next two decades .

This kind of performance and forward-thinking investment signals a new kind of General Electric. Where the company of old let itself become over-dependent on its financial services arm by focusing too tightly on beating quarterly analyst estimates, the new General Electric is focused on making the long-term technology and capability investments in its core industrial businesses that will power out-sized returns for decades to come.

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