GE 2006 Annual Report Download - page 6

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Delivering on commitments is important in our culture. Many of
our mornings begin with meetings to review working capital or pric-
ing. We “sweat” the details required to run a successful company.
Building a reliable growth company that invests and delivers
requires a unique team. They must be “ambidextrous” managers.
They are expected to deliver on commitments in the short term
and required to invest to build leadership over the long term.
Because we are a reliable growth company,
this is the best time to invest in GE. The global
economic environment over the past few
years has been benign. We have had solid
economic growth, volatility has been low and
the risk environment has been stable.
The future may be different. The engine of global economic
growth has been the U.S. consumer, propelled by historically
low interest rates. While consumers are still solid, 17 interest
rate increases over the last two and a half years have mellowed
them a bit.
In almost any economic environment, GE is positioned for
sustained high single-digit revenue and double-digit earnings
growth, while expanding margins and returns. We have used our
size and unique multi-business structure to build early leadership
positions in the trends that shape the future. At the same time, we
remain disciplined in the application of our strategic principles to
deliver consistent performance.
This is the story of how we invest and deliver.
Winning in the Future
To be a reliable growth company requires the ability to concep-
tualize the future. We are investing to capitalize on the major
growth trends of this era that will grow at multiples of the global
GDP growth rate. We are using our breadth, financial strength and
intellectual capital to create a competitive advantage.
These are the trends where GE is building leadership:
Infrastructure Technology. There will be $4 trillion invested in
global infrastructure by 2015. GE has the broadest array of infra-
structure products, services and financing in the world. From Energy
to Aviation to Transportation to Water to Oil & Gas, GE is solving
customers’ infrastructure challenges around the world. We have
more than $120 billion of infrastructure products and services
revenues in our backlog with another $60 billion of Infrastructure
financing assets generating returns for our investors.
When our customers invest in infrastructure, they are looking
for innovation, reliability and financial strength. GE has a leadership
position and can deliver for customers in a unique way.
Emerging Markets. These markets include China, India, Eastern
Europe, Russia, Middle East, Africa, Latin America and Southeast
Asia. They are growing at 3X the global GDP rate based on popu-
lation growth and high oil prices.
GE had $10 billion of emerging markets revenues in 2000.
Today we have $29 billion, and we could have $50 billion by 2010.
We have a great set of financial, technical and services offerings
that we integrate to accelerate growth. We have already invested
in people and capability to establish leadership in these regions.
Only GE has the breadth to adopt a “company-to-country”
approach to emerging markets. When we build a healthcare
facility in Saudi Arabia, we also build a relationship that benefi ts
GE as a whole.
Environmental Solutions. The challenges of global warming,
water scarcity and conservation permeate every part of the
world. While government policies may differ, there is a growing
consensus among our customers that they value technology
that can preserve the environment and achieve productivity at
the same time.
Our ecomaginationSM initiative is designed to drive growth by
creating innovative solutions to environmental challenges. We
have already launched 45 products and have engaged hundreds
of customers. When we started, we had $6 billion of revenues in
ecomagination products; in 2006, we had $12 billion; and by 2010,
we are targeting more than $20 billion.
GE has the technical breadth and credibility and is building
partnerships and capability that should secure decades of accel-
erated growth.
Digital Connections. Our customers are increasingly using the
Internet. Digitization facilitates rapid distribution and knowledge
transfer to a fragmented customer base.
GE is positioned to capitalize on digitization. We have thousands
of engines, turbines, locomotives and scanners in our installed
base. These have been digitized, so that we can provide our cus-
tomers with interactive decision support to boost productivity.
These range from simple online tools to improve a locomotive’s
fuel efficiency to a web-based electronic medical record. Today,
we have $4 billion of fast-growth digital services.
In GE Money, we are originating loans online, which allows us
to reach new consumers with tailored offerings. GE is a leader,
and could originate $15 billion through the Internet by 2009.
The most important impact of the Internet is in our
NBC Universal (NBCU) entertainment business. We are a leader
in content and the Internet opens up new avenues for growth.
We should hit $1 billion of digital advertising by 2009.
Global Liquidity. Global growth and strong capital markets have
created new investment opportunities. Private equity funds have
almost $2 trillion of buying power. More than $600 billion of
wealth is flowing to oil exporting countries each year looking for
investment opportunities.
GE can tap into this liquidity to create investor value. In 2007,
we will originate $50 billion of commercial finance assets and
sell them to investors. This boosts our returns and growth rates.
At the same time, we can partner with multiple funding sources
to accelerate infrastructure investments like power plants, air-
ports and desalination facilities. GE can harness liquidity to expand
our growth rate and lower risk.
GE’s leadership around these major trends creates a foundation
for rapid growth. All our strategies and investments have been
applied to build leadership around these trends. GE is exceptionally
well positioned to win in the future.
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