General Electric Co. (GE)
Q4 2009 Earnings Call Transcript
January 22, 2010 8:30 a.m. ET

Executive

Trevor Schauenberg - Vice President, Investor Communications
Jeffrey R. Immelt - Chairman and Chief Executive Officer
Keith S. Sherin - Vice Chairman and Chief Financial Officer

Analysts

Robert Cornell - Barclays Capital
Stephen Tusa - JP Morgan
Terry Darling - Goldman Sachs
John Inch - Banc of America/Merrill Lynch
Steven Winoker - Sanford Bernstein
Nigel Coe - Deutsche Bank
Jeffrey Sprague - Citigroup
Lee Rosenbaum - Loomis Sayles
Jason Feldman - UBS

Presentation

Operator

Good today, ladies and gentlemen, and welcome to the General Electric Fourth-Quarter 2009 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is (Noelia) and I will be your conference coordinator today. If at any time during the call you require assistance, please press star followed by zero and a conference coordinator will be happy to assist you. If you experience issues with slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh.

As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today''s conference, Trevor Schauenberg, Vice President of Investor Communications. Please proceed.

Trevor Schauenberg

Thank you, Noelia. Good morning and welcome, everyone. We are pleased to host today''s webcast. Regarding the materials for this webcast, we issued the press release earlier this morning and the presentation slides are available via the webcast. Slides are also available for downloading and printing on our website at www.ge.com/investor. We''ll have time for Q&A at the end.

As always, elements of this presentation are forward-looking and are based on our best view of the world and our businesses as we see them today. Those elements can change as the world changes. Please interpret them in that light. For today''s webcast we have our Chairman and CEO, Jeff Immelt and our Vice Chairman and CFO, Keith Sherin.

Now, I would like to turn over to our Chairman and CEO, Jeff Immelt.

Jeffrey R. Immelt

Great, Trevor. Thanks and good morning, everyone. On the first page, which is the overview page, I would make just a couple points that will tee up our presentation for the quarter.

First, the GE environment has improved. We''ve seen orders strengthening, service orders grew by 14%. Our delinquencies have stabilized, non earnings are down so the world we look at really has improved and we''re looking forward now into 2010. The GE business model has performed in the fourth quarter. The things we''ve talked about in the past in terms of how we are running the company I think really did achieved and perform on plan in the fourth quarter. Services grew nicely.

Our margins and cash flow performance were very strong. We won a lot of the big global orders and the capital finance metrics are either at plan or better than plan as we end of the year. The 2010 framework we talked about in December is achievable and balanced we think. The outlook for Capital Finance is improving.

We''ve got high visibility in our backlog and margins and again our service revenue is very strong. And we''ve done a substantial amount of restructuring over the past few years and a lot of those benefits will carry over into 2010 and beyond.

So we think that really gives us a sense that the 2010 framework is very solid. We are positioned for growth in 2011 and beyond. We think that losses in Capital Finance will stabilize in 2010 and start to decline. The infrastructure visibility again is very high and by the end of 2010 and during the year, we should have $25 billion of cash at the GE parent that we can use to keep the company safe and secure and also have ample opportunities to create shareholder value. And we''ve just taken a lot of strong actions to position the company for the future. The portfolio is simpler and stronger. Our R&D investments increased in 2009, so we have lots of new products. We are very well positioned globally, so I think we accomplished a lot in the quarter and feel pretty good about how we finished the year.

On the next page, just some results versus the December outlook meeting. I''m not going to go through all of these, but on the left-hand side, here are some of the key things we talked about in December versus how we finished and we are at or above plan -- or at or above outlook on virtually all the metrics. There are some encouraging signs, orders strengthening, service is very strong. We are able to do more restructuring in the fourth quarter than we originally thought.