GE's Immelt Faces Hurdles
While Jeff Immelt is pedaling as fast as he can, reality is starting to catch up to General Electric.
In three days last week, the industrial and financial conglomerate reached agreement or closed on more than $25 billion in acquisitions, a massive spending spree that included two of the biggest deals in the 111-year history of GE.
On Wednesday, the company signed a definitive agreement to buy Vivendi Universal's film-and-television assets, in a complicated deal valued at about $14 billion. On Thursday, it completed its $2.3 billion deal to buy Finnish medical-device maker Instrumentarium.
On Friday, GE said it would pay $9.5 billion to acquire Amersham, a British medical diagnostic and bioscience company, in the second-biggest GE acquisition ever, behind Vivendi.
All of the transactions crystallize an important shift for the conglomerate away from the steady, industrial businesses that have dominated it for decades, and into riskier, high-growth new areas that GE executives hope will redefine the company.
Why Mr. Immelt, GE's chairman and chief executive, is in such a rush was explained in part by GE's earnings, which met expectations Friday but thrilled no one. The rest of the year is looking dim, as well, and analysts aren't expecting much for 2004. (See related article.)
Though Mr. Immelt says he is convinced all the deal making will revive growth at GE, investors are wondering if they want to wait around until that happens. GE stock fell nearly 3% Friday after the earnings and is down nearly 9% from its 52-week high, set in mid-September.
In the near term, two concerns are weighing on investors. First, GE's cyclical businesses, which should rebound as the economy picks up steam, are fairly flat.
Second, investors seem to realize that Power Systems and its commercial- and consumer-finance unit -- the two engines that drove GE's growth through the 1990s, other than its serial acquisitions -- aren't going to help anytime soon.
Operating profit from Power Systems was down 31% in the third quarter and is down 40% for the year, even though 2002 wasn't great, either. And its finance business, while growing rapidly, already accounts for about half of GE's earnings. If that number goes much higher, GE, which trades at a price to earnings ratio of nearly 21, slightly above the broad market, risks being valued as a financial stock, where P/Es in the midteens are more the norm. Recognizing investors' concerns, Mr. Immelt has said the financial group, mostly commercial and consumer, will eventually make up less than 45% of the company's earnings.
In addition, while GE has improved the disclosure on its financial statements, all these deals will make it hard to figure out if the company's growth is real.
Rich Steinberg of Steinberg Global Asset Management in Boca Raton, Fla., says if GE's new acquisitions and other growing businesses don't meet expectations, the stock will likely suffer. "The only way we're going to be able to justify this valuation is to execute well over the next one or two years in these growth businesses," says Mr. Steinberg, whose firm counts GE as its largest holding.
Indeed, all most investors can hope for is the future -- and that is squarely where Mr. Immelt's eyes were as he repeatedly signed on the dotted line last week. A GE spokesman said the Vivendi agreement, a complicated equity and debt deal, was GE's largest ever. Amersham comes in second, with GE's $6.3 billion deal for RCA in 1986 moving down to third.
Mr. Immelt stresses GE has invested in "two of its most highly valued businesses for investors" by agreeing to acquire Vivendi and Amersham. Mr. Immelt dismisses talk that Amersham takes GE into risky drug-development territory, pointing out that the British company's products support blockbuster drug development and isn't exposed to that boom-and-bust cycle.
For two years since taking over GE, Mr. Immelt has been working to make over GE, looking to scrap some of its industrial businesses like industrial diamonds and pushing into new high-tech and high-growth businesses. He says, "Most companies ultimately get judged on their ability to take a good strategy and execute it. I think we've picked a good strategy."
With Amersham, Mr. Immelt is signaling that health care, with $10 billion in revenue this year, will become an even bigger part of the $132 billion behemoth, and that he is willing to pay up -- and shake up GE's management. To that end, Mr. Immelt named Amersham's chief executive, Sir William Castell, as a vice chairman, the first time analysts can remember an executive outside the company has moved into such a coveted slot. Sir William also was named to GE's board and will take over the newly named GE Healthcare Technologies unit.
The Instrumentarium deal boosts GE's presence in hospitals, where it is trying to build information technology systems. While this is a growing area, hospitals are having a harder time coming up with capital to invest.
The Vivendi deal is by most accounts a good one financially for GE, and the company has clearly done well running NBC. The question remains, though, whether GE's strong management style will work at a movie studio and a chain of theme parks.
Amersham manufactures both instruments and consumable agents used in medical scanning and by research institutions and pharmaceutical companies developing new drug treatments that target specific molecular processes.
GE has been working with Amersham on new agents that can target diseased cells and illuminate cell activity when scanned. With Amersham, GE now will also manufacture the agents, as well as embark on a new specialty -- the protein-separation business. Amersham is the major supplier of instruments and agents to pharmaceutical companies developing genetically bioengineered protein drugs used to treat diseases.
But some investors and analysts remain skeptical of Amersham, which could have limited growth prospects, given that its operating margins already are high. Critics also say that Amersham's culture is strikingly different from GE's. While GE focuses on business processes using Six Sigma to improve profit margins, Amersham invests in high-price research -- an area in which GE has been loath to do so until recently.
Analysts also note that GE is willing to use its own stock as currency for the deal, even though its valuation is below its average for the past few years. On top of that, GE paid 800 pence ($13.32 or �11.27) a share for Amersham, a 45% premium based on Amersham's closing stock price the day before rumors of a deal. Mr. Immelt says the price is in keeping with what GE has paid for other high-growth medical businesses.
Michael Holton, portfolio manager at mutual-fund firm T. Rowe Price & Associates, notes that Mr. Immelt is "realistic on short-term prospects. There isn't going to be any growth."
Nonetheless, Mr. Holton believes the Amersham deal could be good for the long run. "If it works, it's another growth leg that could be a big deal five, 10 years out," says Mr. Holton, whose firm owns 34 million shares according to June 30 financial filings.
通用电气为何如此迫不及待？
虽然掌舵人杰夫?伊梅尔特(Jeff Immelt)正竭尽全力地带领公司前进，但一些现实挑战仍在通用电气(General Electric Co., GE)身后穷追不舍。
上周，仅仅三天时间，通用电气就达成或完成了价值超过250亿美元的并购交易。通用电气用一掷千金的大手笔促成了公司成立111年以来规模最大的两笔交易。
周三，该公司签署了出资约140亿美元收购Vivendi Universal影视资产的最终协议。
周四，该公司又完成了斥资23亿美元收购芬兰医疗设备制造商Instrumentarium的交易。
周五，通用电气又马不停蹄地拿出95亿美元收购英国一家医疗诊断和生物科技公司Amersham。这笔交易金额之大在该公司历史上位居次席，仅次于收购Vivendi影视资产的交易。
上述几笔交易表明了该公司的经营战略发生了重大转变。该公司正在把数十年来一贯坚持的经营战略从表现平稳的工业领域转向风险更高、发展更快的新领域。该公司管理层希望经营方向的战略调整能够使公司的未来发生焕然一新的变化。
那么，伊梅尔特为何如此匆忙地调整公司的经营战略呢？从通用电气上周五的收益报告中我们或许能够找到一些答案。上周五，通用电气公布了与预期一致的业绩，但未能带来任何惊喜。今年剩余时间里该公司的前景显得有些黯淡，另外，分析师对该公司2004年的表现也没寄予太大的希望。
虽然伊梅尔特坚信上述3笔交易可以给公司重新注入活力，但投资者不能确定的是他们是否有足够的耐心等待那一时刻的来临。上周五在公布收益报告之后，通用电气的股价下跌了近3%，较9月中旬创下的52周高点下跌了近9%。
短期内，主要有两个因素困扰著投资者。首先，通用电气的受经济周期影响明显的业务表现相当平淡，并没有像过去一样随著经济形势的好转而反弹。
第二，投资者看来意识到通用电气的两大业务支柱：动力系统(Power Systems)及商业和消费融资子公司短期内无法重现辉煌。20世纪90年代的整整10年里，不是一系列并购交易而是这两块业务，一直在推动通用电气的增长。
尽管上年同期的业绩并不理想，但动力系统公司的第三季度运营利润仍下降了31%，全年目前为止的运营利润下降了40%。另外，虽然通用电气的融资业务正在快速成长之中，但这块业务贡献的利润约占到公司总盈利的一半。如果这一比例继续增长的话，那么通用电气有可能被视为一只金融类股。通用电气目前的本益比接近21倍，略高于大盘。但如果被定位于一家金融企业，该公司的本益比就会高于业内的平均标准，因为金融业的平均本益比仅有15倍左右。伊梅尔特已经注意到了投资者的这种担心，他表示，金融业务为公司总利润所做之贡献将低于45%。
另外，尽管通用电气提高了财务信息披露的透明度，但这些交易仍然使得投资者难以分辨该公司的业务是否出现了实实在在的增长。
Steinberg全球资产管理公司(Steinberg Global Asset Management)的瑞奇?斯泰恩博格(Rich Steinberg)表示，如果通用电气新收购的这些业务以及其他业务增长点的表现无法达到预期，那么其股价就会受到拖累。斯泰恩博格称，要想证明上述成长型业务的确物有所值，该公司必须在未来的一、两年出色地经营上述业务。Steinberg全球资产管理公司对通用电气的投资在其投资组合中所占比例最大。
实际上，该公司的未来才是几乎所有的投资者的目光所在。而伊梅尔特上周签署一系列协议正是著眼于未来。通用电气的发言人称，与Vivendi达成的并购交易规模之大在该公司历史上是空前的。与Amersham的交易排名其次，使得通用电气在1986年耗资63亿美元收购RCA的交易降至了第三的位置。
伊梅尔特强调说，在通用电气看来，Vivendi和Amersham的上述资产对于投资者而言是最有价值的业务，通过收购上述业务，通用电气将其纳入自己旗下。伊梅尔特否认了收购Amersham的交易将把通用电气引入高风险的药品开发行业。他指出，Amersham的产品是为了畅销药品开发提供支持，而不会受到药品开发周期起伏变化的影响。
在接手通用电气后的2年里，伊梅尔特一直在致力于改造这家公司。他希望砍掉工业金刚石等工业部门，进军高科技和高成长性的新业务领域。他表示，如果一家公司找到良好的发展战略并加以贯彻的话，一般情况下这家公司都会受到相应的回报。他认为通用电气已经找到了这样一个良好的发展战略。
伊梅尔特是在发出一个信号：即收购了Amersham之后，公司的保健业务将在通用电气目前每年1,320亿美元的收入中占有更大比例，他愿意为此付出代价，甚至不惜改组通用电气的管理层。通用电气的保健业务目前的年收入为100亿美元。伊梅尔特任命Amersham的首席执行长威廉?卡斯特尔(William Castell)担任公司的副董事长，在分析师的记忆里，这还是外部管理人士首次进入该公司高级管理层。卡斯特尔同时还进入了通用电气的董事会，成为通用电气新创立的Healthcare Technologies子公司的负责人。
通用电气正试图为医院建立信息技术系统，收购Instrumentarium的交易将提升通用电气在医院领域中的地位。虽然为医院建立信息技术系统是个业务增长点，但医院眼下的境况不佳，用于这方面的投资显得捉襟见肘。
在多数人看来，收购Vivendi资产的交易能够提振通用电气的财务状况，毕竟通用电气旗下的美国全国广播公司(NBC)运营状况良好。但问题依然存在，那就是通用电气强硬的管理风格是否同样适用于Vivendi的影视业务及主题公园业务。
Amersham制造的器械和试剂不仅应用于医学扫描领域，还供那些利用特殊的分子工艺研发新药的研究机构和制药公司使用。
通用电气一直与Amersham在新试剂方面保持著合作。当用于扫描时，新试剂能够探测出发生病变的细胞并显示出细胞的活动状态。在得到Amersham之后，通用电气也将生产这类试剂，并开始涉足一个新的领域--蛋白质分离业务。Amersham是那些利用转基因生物科技开发蛋白质药物的制药公司的主要器械及试剂供应商。
但一些投资者和分析师仍然对Amersham的业务前景感到疑虑，他们认为Amersham的增长前景有限，因为其运营利润率已经处于较高的水平。另有人士评论说，Amersham与通用电气两家公司的企业文化格格不入。通用电气注重运用六个西格玛(Six Sigma)的质量管理来改善利润率，而Amersham则在高投入的研究领域不惜本钱，而这正是通用电气一直竭力避免的做法，直到最近才发生了改变。
