(Reuters) - General Electric Co Chief Executive Officer Jeffrey Immelt took responsibility for the U.S. conglomerate’s “tarnished” reputation as a growth company, in a letter to shareholders released Monday.
“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. But, I think this environment presents an opportunity of a lifetime,” Immelt wrote in the letter included in the company’s annual report.
GE shares have lost 75 percent of their value over the past year, a steeper slide than either the blue-chip Dow Jones industrial average or the broad Standard & Poor’s 500 index have witnessed.
He wrote, ”2008 was a tough year, and we expect 2009 to be even tougher.
“The macro-environment has been brutal. The losses in the whole financial services industry are projected to be at least $2 trillion. The lending capacity that has come out of the system is somewhere between $5 trillion and $10 trillion,” he said.
Immelt intends to “reset” the financial services business “to be smaller, less volatile and more connected to the ‘GE core’.”
“Earlier this decade, our financial services earnings received a valuation similar to our industrial earnings; today, it is lower. In the end, having financial services as 50 percent of our earnings was too high,” he wrote.
Shares of GE closed at $7.60 on Monday at the New York Stock Exchange.
Reporting by Ratul Ray Chaudhuri in Bangalore; Editing by Derek Caney