Word: welch
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...been the exception to the rule that conglomerates are clumsy beasts doomed to underperformance. In the two decades since he took the helm from Reginald Jones, another legend, the wiry, intense Welch, son of a train conductor from Salem, Mass., has turned a sprawling $27 billion-a-year industrial conglomerate into a $130 billion-a-year diversified dynamo that sells everything from aircraft engines, power turbines and CT scanners to life insurance, sitcoms, light bulbs and dishwashers. He exited businesses that GE couldn't dominate, from semiconductors to toasters, and earned the nickname "Neutron Jack" for his massive layoffs...
...Welch wasn't perfect--retailer Montgomery Ward and brokerage Kidder Peabody were businesses that blew up on his watch--but GE stock has risen close to 4,000% and the company has consistently delivered 10% to 20% in annual earnings growth. Even during the current downturn, GE posted a healthy 15% rise in second-quarter earnings, though its stock has fallen 33% since its most recent high of $60 last August. No wonder, then, that as Immelt put it at the company's annual managers' meeting in Boca Raton, Fla., in January, "everybody at GE thinks they work for Jack...
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...
...insiders are blown away by how many employees Immelt seems to know, though he's worked in only three of the company's 10 main businesses and never overseas. "I've seen him under fire and under grace, and his instincts are all right on the button," Welch said from his vacation home on Nantucket, where he's getting in some golf before his much anticipated book, Jack: Straight from the Gut, hits stores next week. "My report card comes out in another five years, when Jeff has taken this company to a whole new level, and people are saying...
...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...