1、GE'sappetiteGEsappetiteImmeltstraightbacksIfwesaythatGeneralElectric(GEneralElectricCo.,GE),CEOJeffreyImmelt(JeffImmelt)ofthetroubles,itmaybe-heisalegendarymanagerJackWelch(JohnJackWelch)ofhissuccessor.Welchssuccesswastoogreat,especiallyconsideringthathistermofofficehappenstobetheUnitedStatesanu

2、nprecedented20-yearbullmarket,whileImmelttookovertheglobaleconomyworsened,andbeyondtheformeralmostanimpossibletask.Greaterdifficultyisthat,GEshippedmorethantenyears,effectivewaytodomanyproblemsareexposed.AsthebondkingBillKrausepointedout:GEover-relianceoncommercialpaperasasourceofcash,debtistoohigh,

3、whileitshighgrowthismainlybuiltonmorethan100timesayearonacquisitions.Notonlythat,heleftofficeinWelch,GEconsistsoftheseveneconomicsectors,andnowtheyareinthefivesufferedabottleneck:householdappliancesandlightingbusinesshasbidfarewelltotwohigh-growthphase,powerandaircraftenginesectorincomebytheeconomic

4、fluctuations,too,werelivinginthesameincomeinstabilityentertainmentindustryNBC(NBC)TV.Slowgrowthinindustrialareawhen,GEsbloodmachine-GECapitalthesamecannotbeover-expansion:Asthefinancialindustry,high-risksex,excessivefinancialincomeratiowillaffectaccesstoGEsAAAcreditratingandhigherprice-earningsratio

5、,whichfinancingcapacitywillmakeitgreatlyreduced.WhileImmelttookovertheonefromallanglescanbecalledtheperfectbusinessgiant,hewillcontinuetoworktobedone,asin1993whenLouisGerstner,IBMenteredthesame:tolaunchaoutrightchange.(GEs)investmentportfoliowillchange,inSeptember2019,justretiringJackWelchtoacceptFo

6、rtunemagazineinterview,said,ashepointedoutinhisautobiography,GEinthenext20years,changesinthewillbemorethan20yearsoccurredbeforethegreater,andtheIdonotknowspecificallywhatwillhappen.Buthealsosethisownsuccessor,thepro-confident:Hehasthecourageandwisdomtofindthedirection.Infact,Immelttoachievetheperfor

7、mancecapabilitiesandbroadvisionareundoubtedlyanimportantreasonforselection.ThesizeoftheexistingGEbusinessmodelisalreadyverylarge,hastilyenteringanewareaoroutoftheoldfieldswillresultinearningsembarrassment.However,Immelthadnochoice,ifyoudonotchange,howdifferentfromtheWelcheraofGE?SinceSeptember7,2019

8、Sincethen,Immeltdidnotinterruptthecompanysinternaladjustments,includinglayoffs,homeappliancesandlightingwillbemergethetwosubsidiariesandisactivelyseekingabuyerforthem,aswellasadjustmentofGECapitaltheregulatoryframework.Whenthesehaveprovenaccesstocapitalmarketscannotberecognized,hemustbetakentopointo

9、fmajormoves-theOctober8thisyear,startingwithinthreeconsecutivedays,GEpriceof250billionU.S.dollarshastoVivendiUniversalStudios(VivendiUniversal),theFinnishmedicalequipmentmanufacturermedicalSynopsysInc.(Instrumentarium)andtheBritishmedicaldiagnosticsandbiotechnologycompanies-anMarsanne(Amersham)inthe

10、bag.Intheprevious110-yearhistoryofGE,thelargestdealin1985to6.5billionacquisitionofRCACorporation.Atthispoint,GEsfuturepathisstillnotclear,however,asImmelthasbeenfullyembodiedinthetrainofthought:GiventhesheersizeofGE,tomaintaindouble-digitsalesgrowthtoodifficult,thenewGEisbetinimprovingtheprofitmargi

11、nson.Itwillalsoreturntothetraditional-donotforget,GEisacompanyfoundedbyinventorThomasEdison-theindustrialareaofasmoothshiftfromahigh-techfields.NotjustmergersandacquisitionsSpeculationwiththeoutsideworldisdifferentfromthestartingpointofthereformImmeltdidnotsetupinthemergersandacquisitions.Relativeto

12、thesensationalastronomicaltransactions,internalculturechangemaynotbeexciting,butitisanimportantcornerstone.InwagingachangefromtheinsideoutbeforethefirstleatherImmelttheirlife.September17,GEannounced,unlikeothermanagementtograntingstockoptionsandrestrictedstock,theCompanysImmelttheintroductionofaninc

13、entivemechanismlinkedwiththeperformance:Performanceshares(performanceshareunit).GEawrittenexplanationtothisis:donotneedtostayonGEsCECbonuses,theirstock-basedcompensationwilldependentirelyonitsmanagementperformanceandinvestorrelations.Underthenewcompensationplan,Immeltmorethan60%stakeinprizemoneywill

14、belinkedtotheirperformance.GEsImmeltissuedin2003to25millionsharesofperformanceshares,accordingtothecurrentsharepricesdown30yuan,orabout7.5millionU.S.dollars.ButonlywhenGeneralElectricinthefiveyears,anaverageannualgrowthrateinoperatingactivitieshasreached10%or10%more,Immeltsperformanceofstocksonlyhal

15、fofthesecanbeconvertedintoordinarysharesofGeneralElectric;andonlyintheoverallshareholdertherateofreturnreachedorexceededtheSamp;amp;P500Indexoverthesameperiodtherateofreturn,theremaininghalfoftheperformanceofthestockcanbeconvertedintosharesofGeneralElectric.Welchshigherthanthereward,Immeltismuchmore

16、tobeaggrieved,butthisdecisiondemonstrates:He,likeWelch,likeself-confidence,butWelchwouldneverallowthemselvestosuccessbeforetheBoardofDirectorstoheissomuchpressure.WelchGEinthemanagementofpost-tenyears,eachdaymorethan70%ofthetimewasspentonpersonnelselectionandmanagement,Immeltusedinthisareaforlesstha

17、n50%.Inhisview,theirneedscomeupwith1/5ofthetimetovisitcustomers.ImmeltWelchprefersahands-over:customerisextremelyimportant,withthecustomerhavegoodsalesgrowthperformance.Infact,Immeltisalsopinnedhishopesoncustomerserviceonthecompanyfromthesaleofequipmentintoamarketingservices,isaGE,orIBMofthosehugeco

18、mpaniesmostlikelytograspthegrowthpoint.Now,GEsnewsloganisaACFC:basedonthecustomerservicetocustomers(AttheCustomer,FortheCustomer).Fortheimplementationofthiswork,ImmeltGEsefforttochangethewaytheyoperate,includingtheinteractionforthevariousdepartmentsandprofit-lednatureofsalespersonnelperformanceevalu

19、ationcriteriachange.Foreachmanthemostimportantassessmentcriteriaare:Areyouwhathasbeendonerecentlyforthecustomer?LikeWelchsearlyyears,toimplementaSixSigmaandhandinhand,likeImmeltistemporarilytoobusytotakeintoaccountthetransitioncostsandreturns,hisgoalis:thousandsofbusinessesoperateglobally,asfaraspos

20、sibleandmorewillcomebundledcustomers,thecurrentnumberofcustomersisexpectedtobe40%.Inanincreasinglyhomogeneousproduct,theprofitintheincreasinglylow-costpricewarera,onlytherightcustomerserviceinordertodistinguishitselffromitscompetitors.BancofAmericaSecuritiesDepartmentNicosentLanpointedout:thevastmaj

21、orityofcompaniesdidnotprovidethesameserviceswiththeGEculture,resourcesandmethods.all.RoadPrudentialSecuritiesEmmanuelbelievesthatthanthestandardWelch(GEsbusinessinitsmarketmustbeoneofthebest),thefutureofImmeltswordsconveythemostis:sellingtheproductstohave20%30%oftheknowledgecontent,oryouwillbeinthec

22、ompanysbusinessportfolioisnofuture.Firstattemptisonlyknowledge-sharingaspects.Subsequently,GEwillownbestpractices,workflowandcustomershareorevenatthefootofClosetothecustomerseffortstorepeattheIBMalmostadecadeagointhework,thereisnodoubt,GEcouldnotbeachievedIBMachievements.Thelatterisafocusontheinform

23、ationindustry,andinthisfieldhasadvancedtechnologyandafullrangeofproductsenterprise;GEismorelikeaninvestmentcompanywhoseinvestmentportfolioWuza-Immeltscalculationisbasedonthediversificationofbusinesstohedgetheirrisks.However,aftertheintroductionofthethirdquarter,GEestablishedaportfolioproblemhasbecom

24、emoreclarity.Showedaprofit,GEprofitsfromlastyears4.09billionU.S.dollarsfellto3.65billionU.S.dollars.Infact,GEs13subsidiariesin8-commercialfinance,consumerfinance,consumergoods,insurance,medicalsystems,NBC,specialtymaterialsandtransportationsystems-achieveddouble-digitgrowth.Specialmaterialswhichmore

25、than100%profitgrowth,insurancecompanieshaveincreased85%.Thatis,simplybecausethetwopowersystemsandplasticsbusinessdeclineinbusiness,GEstotalprofitwaspulleddown.Shareswerenotspared.Intheeyesofinvestors,twofactorsthatmakethemskepticalofGEsgrowth:First,GEisnotthesameasinthepastwiththeeconomicsituationim

26、provesandtherebound;Second,inthepasttwobusinesspillars:thepowersystemandtheGECapitalmightnotbetoreproduceinthe1990sglory.AccordingtoImmeltsthinking,thiscase,thesearchfornewprofitgrowthpointisthatbearthebruntofthings.GEapparentlytakenafancyentertainmentindustry.AlthoughWelchisextremelyconcernedaboutt

27、heindustry,andwillreadeverymorningthedaybeforeNBCsratingsandadvertisingrevenue,butneverofthisaspectoftentaclesstretchingoutevenlonger-theindustrysriskistoohigh,withthetraditionalGErobuststyle,verydifferent.However,theriskatthesametimeindicatesahigherprofitmargin.Ifit,likeColumbiaSamsungSonytodo,inth

28、esummerandChristmastwotimeslotsofabout1billioncontributiontotheprofits,GEsreportwilllookalot.Moreimportantly,VivendiUniversalwillstrengthenthebargainingpowerofforeignNBC.Aftertheacquisition,NBCwillgetSci-FiChannelandUSANetwork,aswellasUniversalTelevision.TVinanincreasinglyfiercemarket,forwithoutthei

29、rownTVrevenuenetworkNBCintermsofaccess,morechannelsandmoreprogrammingcapabilitywillbecrucialinfuturenegotiations.ThiscanalsoreducethedependenceonadvertisingrevenueforNBC.Currently,NBC90%oftherevenuecomesfromadvertising.TheacquisitionofUniversalStudios,theadvertisingofitstotalrevenueratiowilldropto55

30、%,while45%ofrevenuewillcomefromthemovieandtelevisionrightsfees.Atleast,inthistransaction,GEonlytakeasmallamountofdebt,andallowVivenditousethenextfewyears,GeneralElectricpaid400millionU.S.dollarsworthofitsstockascollateralforloans,anincreaseof1onitselfanimportantasset.GEsbalancesheetcanbebasicallyintact,creditratingwillnotbeaffected.Suchopportunitiesarenottoomany.Acquis