The top executive of General Electric Co. said today he couldn't predict when the recession would end or how bad it will be, but said the global economic crisis has "fundamentally reset" the way companies do business and capitalism itself.
Speaking at GE's annual shareholder meeting in Orlando, Fla., following what has been a punishing year for the conglomerate, CEO Jeff Immelt said the downturn was the worst since the Great Depression, and that it would ultimately lead to changes such as greater government involvement in business and a restructuring of the financial services sector that was a root of the crisis.
"We are living through history, and I don't mean that in a positive sense," said Immelt, who heads one of the world's largest companies that makes products like jet engines and refrigerators but also has a big financial unit.
Immelt told investors "2008 was tough and 2009 is also going to be tough." He added that it was hard to predict "how bad this will be and how long" the recession will last.
He tried to assure shareholders that GE has positioned itself for an economic recovery, with a new focus on products that could capture some of what GE estimates is $2 trillion worth of government stimulus spending worldwide. That includes windmills and other clean energy equipment and new health care technology to better diagnose illnesses like Alzheimer's disease.
But GE executives acknowledged that GE has suffered during the downturn.
Profits at the company's GE Capital lending arm have fallen sharply as losses on loans like credit cards, commercial real estate and overseas mortgages have grown. GE lost its rare 'AAA' credit rating earlier this year due to GE Capital's woes, and company shares reached an 18-year low in March as investors worried greater losses were coming at the finance unit. Shares have since recovered somewhat after GE gave investors an exhaustive look at GE Capital's books in an effort to ease fears.
GE Chief Financial Officer Keith Sherin was conciliatory when discussing GE's decision to cut its dividend by 67 percent in March, the first reduction in the quarterly payment since 1938. GE has said the move was needed to save $9 billion per year in cash.
"We feel terrible about it, but it was the right thing to do," said Sherin. "We know we have to earn your trust back with good performance."
Shares of the Fairfield, Connecticut-based GE rose 43 cents, or 3.7 percent, to $12.13 in early afternoon trading.