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THE ECONOMY IN 2012
Four things we’re watching
Infl ation is the
“wild card”
Prepare for
high infl ation
Prices have
moderated in
recent quarters
INFLATION
Will it derail the
recovery?
Do not believe
European
governments
will allow for a
“catastrophic
event”
Plan for a
recession
Committed for the
long term to an
important region
EUROPE
What’s the
outlook?
U.S. economy
strengthening
each day
Could be a
pleasant surprise
UNITED STATES
Will politics hurt
the consumer?
Transitioning to a
consumer-driven
economy
Government
investing in
growth
The economic
engine for most
of the emerging
markets
CHINA
Will it grow?
our appliance product manufacturing
will move back from China and Mexico
to the U.S. We think we can make
more money and serve our customers
better. We also think this will make us
a better manufacturing company in
every corner of the world. But it is only
possible because our designers, factory
workers, managers and marketers
work together. GE is a “We Company.”
We are solving problems, tough prob-
lems. We are in the seventh year of a
clean energy business strategy called
ecomagination. Clean energy goes in
and out of focus for governments and
consumers. But, at GE, we are steadfast
in our investing. In 2011, we had $21 bil-
lion of clean energy revenue, growing
twice as fast as the Company average.
Ecomagination drives growth because
we are solving problems for our custom-
ers. At coal mines, from Pennsylvania
to Peru, our water solutions allow
custom ers to operate productively
while achieving high environmental
standards. We demonstrate every day
that, through innovation, we can meet
societal needs and do it profi tably.
We deliver results. That is the ultimate
output of a strong culture. Over the
next few years, our performance will
accelerate. We aim to reward investors
by delivering a more valuable company
and returning cash. We want to earn
your trust.
We believe that culture and resiliency
count in a company. At GE we have a
quiet confi dence in our willingness to
work hard, to learn and, ultimately,
to prevail. This is how we work and how
we earn your trust. It is how we com-
pete and win. GE Works.
A POSITION OF STRENGTH
GE’s Operating EPS growth was 22%
last year. We bought back preferred
shares of stock we issued during the
fi nancial crisis and increased our
dividend twice. Our stock price fi nished
about fl at, in line with the broader
S&P 500 Index. We outperformed the
S&P Financial and Industrial sectors—
the “GE neighborhood”—which declined
by 18% and 3%, respectively, in 2011.
Despite our growth, it was tough for GE
to break away from investor concerns
about macroeconomic risk. Investor
anxiety is understandable. Europe took
center stage as a source of instability.
Daily headlines about Greece, Italy and
the volatility of the European banks
frayed nerves. And, U.S. politics and
defi cit concerns worried investors in
the second half of 2011.
I have been CEO for ten years. In that
time, we have experienced the 9/11
tragedy, Hurricane Katrina, the 2002
recession, the 2008 fi nancial crisis, the
Gulf oil spill, “Arab Spring,” the Japan
tsunami, and now the European crisis—
quite a bit.
Today, we live in what most business
commentators call a volatile world.
I would argue that when the environ-
ment is continuously unstable, it is no
longer volatile. Rather, we have entered
a new economic era. The emerging
economies grow, while the developed
world slows. Some of the world’s largest
economies face massive fi scal defi cits
and must deleverage. Interest rates are
likely to stay low for extended periods.
Material prices are moving higher. There
is broad-based social unrest. And, it
could remain this way for a long time.
I have learned that nothing is certain
except for the need to have strong risk
management, a lot of cash, the willing-
ness to invest even when the future is
unclear, and great people.
We have great fi nancial strength.
Between GE Capital and GE Parent, we
have $85 billion of cash. And we sur-
rounded the Company with a strong
enterprise risk model that has been
GE 2011 ANNUAL REPORT 3