And fire Immelt.
Jeffrey Immelt says General Electric Co.’s growth depends on bringing the right technology products to market, from gearless wind turbines to cancer-treatment tests and engines that turn cow manure into energy.*See also: this morning's "General Electric to Offer $200 Million Smart Grid Prize (along with Kleiner, Perkins; Rockport Capital; Foundation Cap...) GE" or:
“I believe that more investment is going to be required to drive growth,” the 54-year-old chief executive officer said in an interview. “It’s the way you build big service revenues and good margin rates.”
GE will spend $20 billion on technology development in the two years through 2012, and the Fairfield, Connecticut-based company is increasing research expenditures 18 percent this year alone.
Even if the products debut as planned, Immelt needs them to become hits quickly. They will make up a larger share of earnings because the percentage contributed by other businesses is decreasing as GE sells a majority stake in its NBC Universal unit to Comcast Corp. and shrinks GE Capital to less than a third of profit from about half in 2007.
GE divisions excluding media and finance provided 57 percent of the parent company’s $156.8 billion in sales last year, up from 51 percent in 2007. Immelt and other executives are scheduled to host a webcast tomorrow to discuss the company’s performance in the second quarter as investors look for indications R&D investment is paying off.
Whenever a company introduces or overhauls a major product such as a planemaker’s jet engines or a country’s electrical grid, there are risks: the wrong decision may mean being cut out of a market by competitors for decades. GE will add 30 percent more products this year than last with a similar number in 2011, Immelt said.
“It’s a lot more complex for a GE because you have state- overseen type products -- you get the government involved because it’s the grid for baseload power, or rail initiatives, or transport,” said Nick Heymann, an analyst at Sterne Agee & Leach Inc. in New York....MORE