General Electric 2Q17 Earnings Call Notes

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Jeff Immelt – Chairman and CEO


” Let me give you a few themes that describe the environment. U.S. is stable on a slow growth rate, global growth is accelerating, and resource markets remain challenging.”

Bigger picture view of the company

“Let’s take a bigger picture view of the Company. We have created a very strong position in power, healthcare, transport and resources, big industrial segments. We don’t like the current on a gas cycle but our business is significantly improved and will prosper as the cycle recovers. We are gaining share in most of our markets with $327 billion of backlog. We have a leadership position in the industrial internet and additive manufacturing, two growth areas and drivers of industrial productivity.”

No benefit to being overly bullish about prospects for natural gas industry

“I think Andrew, if you look at a micro study like IEA, which or EPE [ph] study of the industry things like that. These would show slow but steady increases in the evolution around natural gas really for the next 20 years, right, in terms of additions to capacity and things like that. And you can triangulate that against whatever your assumptions might be on accelerating penetration of solar, reduction of nuclear. There is a whole series of things over the next five years or 10 years or 20 years. But I think what’s clear is with the ongoing outlook for the cost of natural gas, gas turbans and gas power generation are going to be one of the staples of the future of the industry. Now, does that mean 50 gigawatts, instead of 40 gigawatts in the short-term, I don’t think any of are that smart. You’ve got places like Saudi Arabia that used to be the biggest gas turbine market that have been slower over the last couple of years; they’re going to need capacity; there is — what does China do, vis-à-vis their environmental issue. There is probably five markets that matter that would make it more on the upside, but I actually think there is a fit for the gas market going forward. That being said, I don’t think there is benefit to Jeff or John or to Russell now to be overly bullish about the near-term kind of dynamics around the industry. But at the same time, I think somewhere in the 40ish area is pretty much where I would think about the industry going forward.”

John Flannery – Next Chairman and CEO

Doing a full review and will get back to investors in the fall

“As you know, my official start date is August 1st. And we’d indicated earlier that I’d be doing a full review of the Company and be back to investors in the fall with my views. We are on track with this process. I am in the middle of a series of deep dives into each of the businesses, looking at everything you would expect. What is the market outlook, where can we grow, where can we improve margins, how is the cash conversion, what returns are we getting on investment? For example, next week, we will be visiting our power and aviation businesses. We are also taking a hard look at our corporate spending, going through a zero base budget exercise on all of our functions and making sure 100% of our GE store outlays are accretive to the overall results of the Company.”