GE 2010 Annual Report Download - page 4

2 GE 2010 ANNUAL REPORT
Two years ago, in the depths of the global economic collapse,
I promised that GE would emerge from the recession a better
company. We have. Our financial performance is accelerating.
We have extended our competitive advantage, while investing
in growth. We fortified our leadership and culture.
The world we face in 2011 is getting better. We see signs
of economic strength every day. It doesn’t always “feel great,”
because we have entered a new economic era. Growth around
the world is happening at multiple speeds. Developing markets
like Brazil and India are experiencing fast growth, while much
of the developed world is dealing with sluggish growth and fiscal
constraints. Globally, governments are more active, as they
grapple with problems ranging from high unemployment to
healthcare inflation to crumbling infrastructure.
Volatility has become a way of life. Commodity costs are
increasing as the economy recovers. Geopolitical risk is also
on the rise. Disruption in countries like Egypt and Greece can
now shake the global markets.
Classic economic cycles will be shorter and more
segmented. Long-term growth will be interrupted by short-term
volatility. In this environment, companies must invest to grow,
while staying fast and productive.
We made good decisions during the crisis that are
benefiting investors. We invested in GE Capital to weather the
crisis and retain a strong business model. This required tough
calls, like raising equity in 2008 and cutting the GE dividend in
2009. But today, we have a competitively advantaged financial
services business that is rewarding investors with strong
earnings growth.
LETTER TO SHAREOWNERS
GE’s value is more than the sum
of its parts. GE is an innovative,
advanced technology infrastructure
and financial services company
with the scale, resources and expertise
to solve tough global problems
for customers and society. We are
a competitive force for change.
We invested more in R&D each year, despite the tough
economy. Our R&D spending will have grown 54% from 2008
to 2011. We invested for the long term, while cutting cost in
less-essential areas. We face the future with a stronger product
pipeline than at any time in our history.
We simplified the GE portfolio. We sold our Security
business, completed the joint venture of NBCU with Comcast and
sold some non-core assets in GE Capital. These moves generated
substantial cash for GE. They give us significant financial flexibility
in the global economic recovery.
Because of these actions, GE is positioned for success.
A COMPETITIVE ENTERPRISE
In the 21st century companies must serve two roles. They must
deliver positive returns for investors, and they must be a positive
force for change. GE does both.
GE’s value is more than the sum of its parts. GE is an
innovative, advanced technology infrastructure and financial
services company with the scale, resources and expertise to solve
tough global problems for customers and society. We are a
competitive force for change.
GE has financial strength and resilience. We ended the year
with $79 billion of cash. We have kept the company safe through
volatile times. Our business model allows us to invest in growth
and generate free cash flow at the same time.
We innovate on a large scale. More than half the planes in
the world have GE engines. Jet engines are a technical and
manufacturing masterpiece. We have invested more than
$10 billion in R&D over the past decade to serve our military and
commercial aviation customers. Our new engines are
substantially more fuel-efficient than the ones they replace.
We track thousands of engine performance parameters while
they are in service and use that information to improve
our customers’ performance. Our ability to execute large-scale
innovation is based on GE’s technical depth and scale.
This capability is unmatched and creates customer satisfaction,
employee pride and financial performance. There are very
few companies on earth who do what we do.
We make globalization “work” for employees, customers,
governments and investors. Nearly 60% of our revenue will
come from sales outside the U.S. in 2011 and this will grow over
time. GE is a reliable partner and global investor, with a culture of
compliance. We are a leading American exporter. Last year, we
created major ventures in China and Russia that will accelerate