GE has “played hurt” for the past few years. The end of the “bubble” stock market, the recession and the 9/11 tragedy depressed the markets for our energy and transportation businesses. Our expansion into difficult insurance markets had left us with underperforming businesses and excess leverage. Pension earnings, which were a tailwind in the ‘90s, declined sharply and became a headwind.
We never offered excuses. Our performance was acceptable by any standard but our own. Our earnings should be 50% higher in 2005 than they were in 2000, and our dividend has expanded by more than 50%. But sometimes companies, like people, must go through tough periods to get better.
So we went to the “training room.” These difficult years triggered a critical review of our capabilities by the Board of Directors and the leadership team, and as a result we initiated an exciting transformation. We invested more than $60 billion to create a faster-growing Company. We committed to divest $15 billion of slow-growth assets. We built new capabilities, launched new products, expanded globally and invested in the GE brand. Now the Company has begun an era of strong financial performance, starting in the fourth quarter of 2004 when our earnings grew 18%.
Throughout this period, we have benefited from your willingness to take a long-term view. We relied on your trust to implement this transformation. We asked you to wait patiently for 2005, when we expected to restore our historic performance. We issued more than 450 million shares in 2004 to improve the Company for the future. From time to time, CEOs complain about their investors’ short-term view. Not this CEO. I am indebted to your commitment.
And you will be rewarded. Because of our work and your faith in us, this is the best GE ever. We have created a high-tech, services and financial enterprise that can grow faster with expanding returns, build leadership in fast-growth markets and return cash to you. Moreover, we can sustain this performance in the slow-growth environment we see today. We’re back at full strength. This is our time.
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