NEW YORK (
CEO announced today that as GE heads into 2010, it will be looking for deals to replace NBC Universal revenues following a tough year for the networks and movies, by keeping its attention sharply focused on its core "sweet spots."
Speaking at an annual GE investor conference on Tuesday, GE CEO Jeffrey Immelt said that in the near-term, the company's organic investments will drive growth, especially in the emerging markets, the areas of high-tech infrastructure and financial services.
The company derives more than half its revenue outside the United States. Immelt sees healthcare and IT reform as well as big incentives for technology development around the world going forward and believes that "
GE is well positioned for how this shakes out and where it goes in the future."
"We are an American company that is huge and winning in emerging markets," he said. "We know how to compete anywhere in the world."
GE right now is well-capitalized and will continue to be well capitalized, while maintaining high ratings with ratings agencies, Immelt said.
The company is expected to continue with restructuring throughout the year to simplify the company and make it easier to manage. GE Capital for example will be smaller, but still meaningful.
Immelt pointed out that the company's financial services arm is currently well-capitalized at a tier one capital ratio of 8%, which Immelt expects will grow to 8.5% as the company continues to shrink its balance sheet and exit the highly leveraged parts of its portfolio. He believes the company can restore GE Capital dividends back to the parent within a few years.
Overall, Immelt says, GE wants to de-risk its portfolio by reducing its exposure to insurance and short cycle businesses that have been close to their peak, for example. GE has already exited its plastics business.
In terms of inorganic growth, the company will continue to focus on sectors that did very well in this year: life sciences, oil and gas and wind power, especially in China and the other BRIC countries. Immelt expects the company will support these efforts with $20 billion in investments over three years in technology product development. The company has filed 20,000 patents this decade.
Immelt says from GE's standpoint the worst of the global economic downturn is over: the short-term capital markets are better, the global economy has stabilized and emerging markets are relatively strong. Immelt says the advertising market is also quite good. However, he cautions that unemployment rates and excess capacities are still high; the construction and commercial real estate markets are still challenging, and the government stimulus is yet to be felt.
Looking into his crystal ball for 2010, Immelt's overall outlook for GE is one of plentiful growth.
-- Reported by Andrea Tse in New York
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