GE chairman: Company still on track to increase earnings

Posted 7:57AM on Thursday 25th April 2002 ( 23 years ago )

WAUKESHA, WISCONSIN - Stung by a slipping stock price, General Electric Co. still is on track to increase its earnings by double digits in the next year despite a tough economy, GE's chairman and chief executive said. GE will do that in part with growth in its power business and its high-tech services, Jeffrey Immelt told about 2,000 people at the company's annual meeting. GE's stock price has dropped 15 percent since Immelt took over in September from longtime GE chairman and chief executive Jack Welch. ``GE is a company with an underperforming share price,'' Immelt said. ``To be specific, the stock is where it was three years ago. ... I hate where our stock price is today. ... but our stock price today does not reflect our performance or our value.'' Immelt said the company increased its earnings by 11 percent during 2001 and now earns 50 percent more than it did three years ago. Immelt, 46, joined GE in 1982 after graduating from Harvard Business School. He spent three years running GE's medical systems business in Waukesha, where Wednesday's meeting was held. During Welch's two decades as its leader, GE expanded from a $13 billion appliance and light bulb maker into a $480 billion conglomerate that provided strong returns during tough economic times. But earlier this month, General Electric reported its first-quarter earnings slipped to $2.5 billion in the January-March period, down from profits of $2.57 billion in the same quarter of 2001. Its income before accounting changes totaled $3.5 billion. The company announced April 15 that it will eliminate 7,000 jobs at GE Capital, its financial services division, in a cost-cutting move. That's slightly more than 2 percent of its work force of 310,000. GE shares closed down 30 cents to $32.50 in trading Wednesday. During the meeting, Immelt received praise from shareholders, although a few like GE engineer Jonathan Rutschky from Eagle wondered outside the meeting whether the Ohio native could live up to Welch. GE, like other companies, has faced increased scrutiny since the Enron scandal. Analysts have demanded more information, and a leading bond fund manager last month questioned GE's honesty when it explained the issuance of $11 billion in longer-term bonds and the source of its consistently strong profits. GE has denied misleading investors, and Immelt said the company has expanded its annual report and conference calls with analysts and shareholders. ``Shareholders have every right to be concerned, to ask questions,'' Immelt said. Immelt also addressed environmental concerns of some shareholders by saying GE is committed to working with the federal Environmental Protection Agency to have the Hudson River dredged for PCBs. In the past decade, GE has spent $1 billion on environmental cleanup, including $200 million on the Hudson, Immelt said. GE dumped the vast majority of the PCBs into the Hudson that are contaminating sediments. Polychlorinated biphenyls, or PCBs, have been linked to cancers in tests on laboratory animals and neurological problems among adults.

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