General Electric Co
Our company's reputation was tarnished because we weren't the 'safe and reliable' growth company that is our aspiration. I accept responsibility for this, Immelt, 53, wrote. No one is more disappointed than I am with the performance of our stock in this tough environment.
GE shares have been pounded down some 77 percent over the past year, a far steeper drop than either the 44 percent fall of the Dow Jones Industrial average <.DJI> or the 47 percent slide of the broad Standard & Poor's 500 index <.SPX>.
The world's largest maker of jet engines and electricity-producing turbines reported a 22 percent drop in profit last year, with the primary drag its hefty GE Capital finance arm, which had once represented half its earnings. Immelt now wants to reduce that to about 30 percent of the total GE pie.
We will be taking a close look at nonstrategic assets in these businesses, such as equipment services businesses, most of our consumer mortgage books and a dozen or so small or subscale commercial and consumer platforms that we will reduce over the next few years, said Immelt, who declined his bonus last year.
He asserted that the entire financial services industry would need to be rethought in the wake of a worldwide recession that started with popping of the U.S. housing bubble -- a bubble that had been created by repackaging mortgages and other shaky debts into ever-more-complex financial instruments.
This philosophy transformed the financial services industry from one that supported commerce to a complex trading market that operated outside the economy, Immelt said.
Immelt long defended the company's 31-cent-per-share quarterly dividend, holding that up as an equal priority with maintaining GE's triple-A credit rating. GE on Friday slashed its payout by 68 percent to 10 cents per share, starting in the second half.
Despite that move, Moody's Investors Service and S&P have kept its credit ratings on review for possible downgrade.
We will continue to run the company with the disciplines of a 'triple-A,' including adequate capital, low leverage, solid earnings and conservative funding, Immelt said.
GE shares were up 17 cents to $7.77 in premarket electronic trading, from a $7.60 Monday New York Stock Exchange close. That represents an 81 percent drop in the Fairfield, Connecticut-based company's stock price since Immelt took the reins in September 2001.
(Reporting by Scott Malone in Boston, additional reporting by Ratul Ray Chaudhuri in Bangalore, editing by Dave Zimmerman)