GE 2010 Annual Report Download - page 10

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8 GE 2010 ANNUAL REPORT
LETTER TO SHAREOWNERS
Our ability to develop leaders continues to be recognized
by the outside world. For 2010, GE was voted “number one”
in developing leaders in a prestigious poll conducted by the Hay
Group and BusinessWeek.
One last element of leadership is the responsibility to serve
broader interests. To that end, I was asked by President Obama
and have agreed to chair the President’s Council on Jobs and
Competitiveness. Rest assured, I will continue to work as hard as
I ever have for the success at GE. At the same time, I will work
with other CEOs and public leaders to improve American
competitiveness and innovation. I run a competitive enterprise
and remain an unapologetic globalist. GE is a “private enterprise,”
with only 4% of our revenue sold to the U.S. government.
But the world still looks to America for leadership, and I am
committed to do my best to help.
LOOKING BACK AND LOOKING FORWARD
I have begun my tenth year as CEO of GE. Looking back, no one
could have predicted the volatile events of the last decade:
two recessions; the 9/11 tragedy; Hurricane Katrina; the world
at war; the rise of the BRICS; the financial crisis; the Gulf oil spill,
just to name a few.
I took over a great company, but one where we had a lot of
work to do to position GE to win in the 21st Century. Despite our
high valuation, we were in businesses where we could not sustain
a competitive advantage, like plastics, media and insurance. We
made a capital-allocation decision to reduce our exposure to
media and invest in infrastructure. And we had to rebuild our Energy
business, where most of our earnings in the late 1990s came
from a “U.S. Power Bubble” that created significant excess capacity.
Our team rolled up their sleeves. Ultimately, we exited
about half of our portfolio. We invested in Infrastructure businesses
like oil & gas, life sciences, renewable energy, avionics, molecular
medicine and water. We restored our manufacturing muscle.
And we focused and strengthened GE Capital. As a result of these
actions, we have our most competitive portfolio in decades.
We made big bets in technology, globalization and
customer service. We doubled our R&D spend over the past
10 years and it now equals 6% of Industrial revenue. We
repositioned leadership and capability to win in global growth
markets. We have grown global revenue from 36% of GE’s
revenue to 55% in the last decade. We have invested in sales
force excellence, marketing, and customer support.
Services have grown from 30% of GE’s industrial earnings to 70%
in the last decade. And GE is the world’s fifth most valuable brand.
We promoted a culture that demanded financial
accountability and long-term thinking. Leaders understand their
responsibility to invest in the future of their business. But we
still compete hard. Our productivity, measured by revenue per
employee, has expanded by 50% since 2000. Our Industrial
margins and returns exceed other great companies like Honeywell,
Siemens and United Technologies.
Despite all these changes, our cumulative earnings
and cash flow over the last decade would rank in the top ten of
companies in the world.
Being a CEO can be pretty humbling. I have made a few
mistakes and learned a lot over the last decade. I am more
resilient. To do this job well, you have to “burn” with a competitive
flame that demands daily improvement. My desire has never
been greater.
Making these changes in volatile times has demanded
patience from our long-term investors. However, today, we earn more
money than we did when the stock traded at an all-time high.
The toughest years of my life were 2008 to 2009.
They were difficult for the company, investors, and the economy
as well. But our team worked hard for investors and the
company. We promised you we would come out of the crisis a
stronger company, and we have.
There are many reasons to invest in GE. I have always
described myself as a tough-minded optimist. I have never been
more optimistic than I am today. GE’s best days are ahead!
Jeffrey R. Immelt
Chairman of the Board
and Chief Executive Officer
February 25, 2011