GE tries to woo investors with 'digital industrial' vision

February 29, 2016
GE tries to woo investors with 'digital industrial' vision
In this Monday, Feb. 22, 2016, file photo, General Electric CEO Jeffrey Immelt speaks at the annual IHS CERAWeek global energy conference in Houston. General Electric is promising to boost its earnings by about 15 percent in each of the next three years and dole out $67 billion to shareholders as Immelt tries to create a "digital industrial" company. Immelt made the financial pledge while spelling out his vision for the 138-year-old company in a letter released Monday, Feb. 29, 2016, with GE's annual report. (AP Photo/Pat Sullivan, File)

General Electric is promising to boost its earnings by about 15 percent in each of the next three years and dole out $67 billion to shareholders as CEO Jeffrey Immelt tries to create a sleeker, "digital industrial" company.

The $67 billion will be paid through a combination of quarterly dividends and repurchases of GE's stock through 2018. The Fairfield, Connecticut, company returned $33 billion to shareholders last year.

Reducing the amount of GE's outstanding stock will also help the company realize its goal of increasing its adjusted annual earnings from $1.31 per share last year to more than $2 per share in 2018.

Immelt made the financial pledge while spelling out his vision for the 138-year-old company in a letter released Monday with GE's annual report.

The wide-ranging letter calls for General Electric Co. to become less bureaucratic and more innovative as Immelt strives to turn it into one of the world's 10 biggest software companies by 2020.

Immelt conceded the transformation won't be easy. "There is no blueprint for what we are trying to do and, at times, it will be messy," he wrote.

To help him sculpt GE into a nimbler company, the 60-year-old Immelt is getting advice from "early career leaders" in what he described as a "humbling" experience. "Through their eyes, I can see the evil nature of corporate bureaucracy; they are a good mirror for my own failings," wrote Immelt, who has been running GE s since 2001.

As part of its makeover, GE has jettisoned most of its financial services and other operations that no longer fit into Immelt's strategy. Last year, GE negotiated sales totaling $157 billion

On the flip side, the company became an even bigger player than it already is in the energy industry with a $10.6 billion acquisition of the power and transmission of French manufacturer Alstom.

The reorganization went over well with investors. GE's stock climbed 23 percent last year while the Standard & Poor's 500 dipped by about 1 percent. The shares shed 22 cents to $29.18 in Monday's late afternoon trading.

In trying to reposition itself as a company on the cutting edge of technology, GE is hoping to recapture some of the luster that it has lost amid problems in the financial services division that once was among its brightest spots. Once the most valuable company in the world, GE's market value has declined by about $70 billion during the past decade.

Meanwhile, investors have been gravitating to technology companies as the Internet and a variety of gadgets reshape society and the economy.

Technology bellwethers Apple Inc., Google parent Alphabet Inc. and Microsoft Corp. are now the world's three most valuable companies and 12-year-old Facebook Inc. also is currently worth more than GE.

In his letter, Immelt asserted that GE is "underowned by big investors." He is betting he can change Wall Street's perceptions about the company by encouraging his subordinates "to dream about new levels of growth and performance."

Explore further: General Electric to move headquarters to Boston

Related Stories

General Electric to move headquarters to Boston

January 13, 2016

General Electric announced Wednesday it will move its headquarters to Boston, leaving the sprawling suburban Connecticut campus it has called home over the past four decades for a technology-rich city it says better fits ...

GE to hike pro-environment energy research by $10 bn

February 25, 2014

US industrial conglomerate General Electric said Monday it would boost spending on environmentally friendly energy research by $10 billion by 2020, including on fracking technologies and wind turbines.

Recommended for you

WhatsApp vulnerable to snooping: report

January 13, 2017

The Facebook-owned mobile messaging service WhatsApp is vulnerable to interception, the Guardian newspaper reported on Friday, sparking concern over an app advertised as putting an emphasis on privacy.

US gov't accuses Fiat Chrysler of cheating on emissions

January 12, 2017

The U.S. government accused Fiat Chrysler on Thursday of failing to disclose software in some of its pickups and SUVs with diesel engines that allows them to emit more pollution than allowed under the Clean Air Act.

0 comments

Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.