GE: What To Look For In GE's Annual Outlook Meeting

| About: General Electric (GE)
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Summary

GE’s strategy remains focused: be the world’s best infrastructure and technology company with a smaller specialty finance business.

Important portfolio moves, growing the services model and delivering cash to shareowners are key parts of this strategy.

GE to hold its Annual Outlook investor meeting on Tuesday 12/16.

Written by VP of GE Investor Relations, Matt Cribbins.

Each December our Chairman and CEO Jeff Immelt gives insight into what the New Year will look like for GE (NYSE:GE) and its investors. We engage with investors throughout the year through quarterly earnings reports, investor meetings and filings, but this meeting -- Annual Outlook -- gives investors a wide-lens view of the company's longer-term prospects. We have a focused strategy for our shareholders: grow our infrastructure portfolio alongside a smaller, safer specialty finance business. We'll do this by capitalizing on our core strengths in technology, global growth, our ability to drive customer outcomes with services, and our culture of simplification. Simply put, we build things that power the world.

Here are a couple other things you should know about our Outlook meeting if you want to tune in this year. It is tomorrow, December 16th, 2014, at 3 p.m.

Portfolio moves and our 75/25 Goal

This year we made some big moves in our portfolio as we continue to increase the share of earnings generated by our industrial businesses. Last December, we said that we were shooting for a 70/30 split by 2016 - achieving 70% of earnings from our core industrial businesses while making GE Capital a smaller, safer complement at a 30% share. Our proposed acquisition of Alstom's Power and Grid businesses, the largest in our company's history, changed that outlook a bit. It's an attractive long-term investment that greatly increases our footprint in emerging markets, bolsters the size of our installed base and brings a more complete technology offering to customers. Upon closure, we expect to achieve a 75/25 ratio by 2016.

We have also continued with portfolio moves this year to reduce our non-core assets. In GE Capital, we ran a successful IPO of our retail finance business, completed the sale our Nordic consumer finance business, and recently announced the sale of Budapest Bank in Hungary.

In September, we announced a definitive agreement to sell our Appliances business to Electrolux for $3.3 bilion. This deal also furthers GE's strategic focus on infrastructure and technology, and the reshaping of the portfolio.

Continued focus on building our services business

In October, we held an investor meeting around our annual Industrial Internet event, Minds + Machines. We took the opportunity to talk about our services business, which accounts for about 75% of our industrial profits. We believe the combination of physical and analytical will drive the next evolution of services. We've spent the last few years building out our software capability to capitalize on the convergence of the physical and digital worlds. This convergence has enabled GE to build apps, or Predictivity apps, that use data from connected machines to optimize outcomes for customers.

We disclosed two important numbers in that meeting -- that we expect $1 billion+ revenues from Predictivity services in 2014 and $4-5 billion by 2017. As our Chief Economist Marco Annunziata noted, a company that produces connected devices becomes a fundamentally different company. And just last week we announced that Japanese telecommunications and Internet giant Softbank will become the first partner to license our platform, creating an entirely new revenue stream for GE via the Industrial Internet.

Delivering for shareowners

Returning cash to shareowners remains our top priority. As you may have seen last week, we increased our dividend by 5%, our seventh increase in five years. We plan to generate $90B in cash from 2014-2016 and employ a balanced approach to capital allocation. As I said earlier, we'll continue to win by 1.) Investing in technology, 2.) Building global capability, 3.) Bolstering our services business and by 4.) Simplifying the way we do business.

Look forward to you tuning in.

Matt

Disclosure: This post was written by GE executive Matt Cribbins. We will continue do our best to provide you with thoughts from our senior leaders and insights on our company strategy, while also being responsive to your questions.