On my mind : Jeff Immelt's Blog
Big Change
Today, we announced an exciting and promising new chapter for GE, a plan to create a simpler, more valuable industrial company by reducing the size of our financial business. As a first step, we also announced agreements to sell the bulk of GE Capital Real Estate assets for a total value of approximately $26.5 billion.
As the senior management team and Board carefully considered this move, we asked ourselves some key questions: What is going on in the world? Is this the right time? Is this good for customers and investors? What will GE look like going forward?
Coming out of the financial crisis, financial markets have changed for a generation. GE Capital has solid businesses and a great team. However, the business model for large, wholesale-funded financial companies has changed, making it increasingly difficult to generate acceptable returns going forward.
This is a good time to move. Synchrony Financial’s successful IPO and other recent Capital business exits bolstered our confidence that our businesses will be more valuable outside of GE. The market is strong for the businesses we will sell, and I am confident they will thrive elsewhere.
We are also confident that creating a simpler GE will position us to deliver superior outcomes around our core capabilities. Every GE business – including the Capital aviation, healthcare and energy “vertical” financing businesses – will be part of the “GE Store” of technology, process tools and cultural strength. As we build the next industrial era, customer focus is more important than ever.
For investors, we anticipate our high-value industrials to generate more than 90% of our earnings by 2018. And, we expect to return more than $90 billion in cash to investors through dividends, share buybacks and the Synchrony exchange through the end of 2018.
GE today is a premier industrial company with businesses in high-growth industries. We are leaders in technology, well positioned in growth markets and delivering higher margins and lower costs. This transformation positions GE for long-term success as we pair our best-in-class industrials with financial businesses focused on growth.
I know I speak for all of GE and the Board when I say that we are proud of the Capital team, the outstanding businesses that Capital employees have built and how they have delivered for customers and shareholders over many years. The Capital team has displayed great resiliency, facing tough cycles and driving strong results. Keith and his team deserves our thanks and support as we manage this transition and build a simpler and more valuable GE.
This was a hard decision and a big change for GE. However, it is right for the company.
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