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General Electric Company (GE)Stock (Conglomerates Industry, Consumer Products Industry, Energy Industry, Manufacturing Industry, Transportation Industry)
 This article should cite more sources.  General Electric Co. (NYSE: GE) is a multinational conglomerate specializing in technology and services. The scale of GE's operations is enormous; in 2006, GE was the eleventh-largest company in the world by revenue, and it's the second-largest company by market capitalization, second only to Exxon Mobil (XOM). In 2007, the firm generated $173 billion in revenue, up 14% from 2006. Since its founding in 1879, GE has continually expanded its operations, which now span the financial services, energy, industrial manufacturing, healthcare, and media industries. Its longevity and highly diversified portfolio have made GE a bellwether for the U.S. stock market as a whole, it's performance correlating almost perfectly with the S&P 500 since 1970. GE's diversification provides the company with a degree of protection against poor performance in any one market, industry, or business segment. If the entire NBC division had just disappeared in 2006, GE's revenues would have plummeted from $163.4 billion to $147.6 billion, making it only the twelfth-largest company in the world by revenue. Additionally, GE's size enables it to pursue a strategy of buying and selling companies to take advantage of favorable market conditions. This has been one of GE's biggest strengths, allowing it to maintain competitiveness in an evolving global marketplace. A highly diversified portfolio does, however, have its drawbacks. Just as GE's operations in a wide range of industries insulates it from poor performance in a single market, it also diminishes the positive impact of strong performance in any one market. Additionally, GE's strategy of regularly acquiring and selling companies could potentially backfire. If these acquisitions and sales aren't timed perfectly, GE could either lose money or miss out on significant growth opportunities. GE's large international presence can also have negative implications for the company. Though international markets (particularly emerging markets) provide the possibility for substantial growth, global expansion exposes GE to a variety of new laws and regulations, some of which can negatively impact GE's revenues or profits. The recent subprime lending crisis has had a sizable affect on GE. During the first three quarters of 2007, the firm posted subprime losses, culminating in a $300 million to $400 million 3rd quarter 2007 loss related to its planned exit from the subprime market.
[edit] History and Corporate Overview  General Electric, the brainchild of Thomas Edison, traces its roots to 1876. The invention of the incandescent lightbulb spawned the formation of the Edison Electric Light Company in 1890. Two years later, the company merged with its largest competitor to form the General Electric Company. GE was one of the twelve companies that composed the original Dow Jones index in 1896, and it's the only one of the twelve that remains on the index. General Electric is now a large conglomerate composed of six distinct divisions:
General Electric's six segments are themselves divided into two general groups: GE and GE Capital Services (GECS). GECS represents the commercial and consumer finance divisions, while the GE group includes the other four segments. Though GECS is a relatively new addition to GE's portfolio, it accounts for a significant percentage of total company revenues.  General Electric has continued to prosper in 2007, realizing overall growth in revenue and earnings. This strong performance fuels the firm's prolific dividend payouts to investors. Emerging Markets and their thirst for power, planes and infrastructure were crucial to the orders growth, offsetting turbulence in the American financial and housing markets. Additionally, GE's effort to sell service contracts to the buyers of its industrial products provide ongoing revenue for the company after initial sales. 2007 revenues totaled $173 billion, up 14% from 2006, and earnings totaled $22.5 billion, up 16% from 2006. This came despite extreme volatility in the financial services markets that resulted in a $100 million loss in the 3rd quarter. Infrastructure, which accounts for one third of revenue and 40% of earnings, provided much of the boost in 2007 by delivering 23% revenue growth and 22% profit growth in 2007. Furthermore, NBC Universal achieved profit growth in all 4 quarters of 2007, thanks to the successful launch of its new prime-time television line-up, a strong cable performance and a host of popular summer films. The Healthcare division was fairly stagnate in 2007, in part due to a deficiency found in its X-ray surgical imaging systems. Subprime lending losses of over $300 million were largely offset by gains from the $11.6 billion sale of the company's plastics division. In May 2008, GE announced plans to seek a buyer for its large appliances division, which makes such things as washing machines and refrigerators. By summer 2008 GE revised its plans to instead spin-off the appliances division to shareholders as a independent company. This unit accounted for 4.1% of GE's 2007 revenue. This is part of an ongoing process under CEO Immelt to sell off product lines with limited growth potential, which so far has included the sale of GE's private label credit card and the company's consumer finance unit in Japan, and refocus on areas of potentially higher growth, such as water treatment or aviation. [edit] Trends and Forces [edit] Maintaining flexibility through acquisitionsAs a large conglomerate with substantial purchasing power, General Electric employs a strategy of acquiring and selling off companies to maximize revenues at any given time. By using this strategy to enter and exit various industries, GE adjusts its portfolio of offerings in order to take advantage of profitable conditions in any one market or industry. For example, improved fuel efficiency in airplane engines has reduced commercial airlines' operating costs, allowing them to expand their fleet of airplanes. GE has responded to this trend by expanding further into the engine production and airplane leasing businesses. Because GE's operations are spread across several different industries, acquisitions and sales are very common and frequent. Some of the most recent include:
 [edit] Global expansion focusGE has been greatly expanding its presence across the world, particularly in emerging markets. International markets often provide higher growth potential, driving GE's push into new geographic regions. This has proven successful so far, with revenues increasing in each of GE's markets for the past few years and offsetting sluggish economic growth in 2007 and 2008. Though global expansion offers the possibility for higher revenue growth, there are also some risks involved. Laws and regulations, which differ from country to country, can significantly impact GE's performance. For example GE's Consumer Finance division suffered a loss of $400 million as the result of a 2006 Japanese law allowing customers to claim partial refunds for the interest they'd paid to GE. To make matters worse, in December of 2006, Japan passed a law that lowered the maximum interest rate lenders (such as GE) can charge and put limits on consumer borrowing. These difficulties likely influenced GE to sell its consumer finance operations in Japan to Shinsei Bank in the summer of 2008 and exit consumer finance in Japan altogether. Regulations such as these can make international expansion somewhat risky, causing GE to be very careful about where and how fast it enters new markets. [edit] Sensitivity to U.S. dollarGE does the majority of its business outside of the U.S., earning its revenue in a variety of different currencies. As a U.S.-based company, however, GE's revenue is reported in U.S. dollars. Fluctuations in the dollar's exchange rates can substantially increase or decrease GE's revenues (as reported in USD). In general, a weakening of the US dollar is beneficial for GE's international operations. As the value of the dollar falls, any given amount of foreign currency converts to a larger number of USD (in nominal terms). Since its revenues are counted in USD, this can boost GE's revenues. If the dollar's value increases, however, income in other currencies yields fewer USD, which can negatively impact GE's revenues. Given the size of GE's international operations, the effect of exchange rates can be significant, reducing or increasing total revenue by hundreds of millions of dollars.
[edit] Nuclear Growth for GEGE Energy is the only US based company that has the technology to build a nuclear power plant and has the most advanced design for a safe nuclear power plant. They have built four and are in the process of building three more. However, none of them are in the U.S. In fact, there has not even been an application for a new U.S. nuclear power plant submitted in almost 30 years. But from the end of Q3 2007 through the end of this year, there is estimated to be close to 30 such applications filed. Under the Energy Policy Act of 2005, the industry is getting something like $12 billion in subsidies to build new plants. And they will be getting more in federal loan guarantees and risk insurance. [edit] Competition GE competes against a number of other companies, but most of them are more specialized, focusing in one industry. GE's operations, on the other hand, are spread across many different industries, limiting its exposure to competition from any one company. As such, very few companies pose a significant threat to GE's revenues of profits. Of GE's competitors, Siemens AG (SI) is the most significant. Siemens operates in a number of different industries, many of which it shares with GE. In fact, NBC Universal is the only of GE's six divisions that Siemens does not directly compete with. GE is the larger of the two, with revenues of over $163 billion in 2006 as compared to Siemens' $115 billion. Despite GE's size advantage, however, Siemens is still a very large company in its own right, and it's the only company that effectively competes against GE in nearly all of its main industries.
[edit] Studio Market ShareThe following chart shows 2007 domestic studio market share by gross revenue. Total gross revenue in that year was ~$9.7B for the industry as a whole[1].
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