Word: ge
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Dates: during 2000-2009
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Immelt believes that "services are still in their infancy" at many of the company's other divisions. Rather than just sell aircraft engines, for instance, GE can help airlines maintain them, even remotely monitoring performance from the ground while the jets are in the air. Power systems, currently enjoying a $40 billion order backlog, can work with utilities to maximize efficiency and eventually offer forecasting technology to better predict electricity demand. Medical, which Immelt transformed from a $4 billion imaging-equipment vendor into a $7 billion, full-fledged systems provider, not only sells MRI machines to hospitals but also monitors...
There is plenty of work yet to do on the portfolio that Welch created. GE's long-cycle businesses, such as power and aircraft, where orders are locked in years in advance, are in good shape. Not so the short-cycle divisions, such as appliances and lighting. Many observers expect Immelt to get out of the cutthroat business of selling dishwashers and refrigerators, which Welch was unable to do. Still, "having a few consumer brands is worth something," says Noel Tichy, a University of Michigan management professor who ran GE's famed Crotonville executive-training center in the mid-1980s...
...primary strategic mission for Immelt is to hasten GE's transformation from a low-margin manufacturer to a more lucrative services company that sells solutions as much as stuff. In GE's world there are fewer but bigger customers, so there's a vital need to maximize the relationship--to milk them for all they're worth. GE now gets 70% of revenues from services, compared with about 15% when Welch took over. The bulk of it, however, comes from its giant GE Capital subsidiary, with $370 billion in assets...
...potential stumbling block is, quite simply, GE's size. At some point, skeptics argue, GE will find it nearly impossible to continue its torrid pace of growth. "Ultimately, the law of large numbers will have to win out," William Fiala, an analyst at Edward Jones, wrote in a report on GE that came out last week. He means that to increase sales just 10%, GE will have to find $13 billion in new business this year and $14.3 billion next year. Not surprisingly, Immelt, who sees GE as a collection of smaller pieces with lots of room to grow, doesn...
...GE typically makes 100 acquisitions a year--fuel for much of its annual growth over the past 15 years. That pace may have to quicken. Earlier this summer, GE Capital paid $5.3 billion for Heller Financial, which should give it more access to financing small and medium-size businesses. Capital's only possible "missing link," Merrill Lynch analyst Jeanne Gallagher Terrile points out, is a thriving business managing money for aging baby boomers...