No Nasty Surprises in GE’s Annual Report (GE)

General Electric (NYSE: GE) issued its annual report, which Wall Street considers as a Bible for public companies.  We normally peruse 10-k filings (annual reports) for all sorts of tidbits on companies and use them as references for many years. 

But today’s annual report filing from GE was by and large nothing that investors needed to worry about.  Not this time anyway.  We just noted that CEO Jeff Immelt plunked down a couple million dollars to buy stock, and he bought more shares a few weeks ago.  It isn’t as though CEO’s and CFO’s aren’t aware of what is about to be published in an annual report.  If the report was going to have all sorts of bad news he would have waited to buy shares after the report came out.

In his annual letter, Immelt did note that GE should hit its annual targets in 2008 with 10% revenue growth to $195 Billion on EPS growth of 10% and an average return on capital should be near GE’s target of 20%. It still plans to return some 418 Billion in capital to holders via dividends and buybacks.  But there are some interesting issues regarding how units are growing:

• It has $150 Billion in infrastructure products and services in backlog.
• It has NO exposure to CDO’s and SIV’s and has a AAA rating.
• The company noted that its Ecomagination unit sales will be roughly $20 Billion by 2009. It will also invest $6 Billion to finance renewable energy projects. It now sees $25 Billion in its Ecomagination revenue target by 2010.
• Emerging markets are expected to generate roughly $40 Billion this year.
• It sees $2 Billion in business from its leadership position in China on the Olympics this year.  It sees Middle East & Africa revenues of $13 Billion in 2010.

There are many other points as well, but these are some of the efforts that have developed into solid businesses that had not been dominant in the past.

Immelt will host a retail investor call tomorrow.  This webcast is a first for GE and will be broadcast across a number of internet properties, including CNBC, MSNBC, CNN, MSN, AOL, Yahoo, Bloomberg, Forbes and thestreet.com.

Jon C. Ogg
March 12, 2008