Gates, Doerr Issue Warning about America's Future

Computer World

Join GE CEO Immelt in effort to help U.S. gain an innovation edge in the push for clean tech

 

The ever expanding BP oil spill, in a sense, provides Bill Gates the perfect backdrop for selling Congress and the White House on a proposal to increase annual U.S. spending on clean energy research and development from $5 billion to $16 billion.

Gates, General Electric Co. CEO Jeff Immelt and venture capitalist John Doerr, a partner at Kleiner Perkins Caufield & Byer, are among the well-known business people involved in high-level lobbying effort on clean energy.

The trio discussed the need for clean energy investment at a press conference here today, and are slated to discuss it further with President Barack Obama this afternoon.

Today's message, and a related American Energy Innovation Council report listing a number of energy policy recommendations, didn't cite BP oil spill. It was about which country will lead in what may easily be the world's next big industrial push.

Gates, Immelt and Doerr are all members of the energy innovation council.

This business-driven push for a better energy plan already has some congressional support, principally from U.S. Rep. Bart Gordon (D-Tenn.), who heads the House Committee on Science and Technology. He said Thursday that he plans to work with the group on legislation that implements its proposals.

At an earlier meeting with congressional leaders on the BP oil spill, Obama made note of today's planned meeting today with Gates and others.

"We can't keep our eye off the importance of having an energy policy that meets the needs of the next generation and ensures that the United States is the leader when it comes to energy policy," said Obama. "We are not yet that leader, and that's what I want us to do."

The U.S. isn't the worldwide leader in clean technology today, agreed Doerr during the press conference. America is a worldwide leader in biotechnology and information technology, he said, but "that's not the case in today's energy technologies."

Of the top 30 new energy technology companies worldwide that produce batteries, solar technologies and advanced wind energy, only four are headquartered in the United States, Doerr said.

"It's very sad that Americans spend more on potato chips than we do on investment in clean energy R&D," said Doerr.

Gates said more federal research spending is needed to spur investment in clean technologies. "The incentives aren't there to make it happen," said Gates.

"In the same way that the U.S. has led in health care, the same way we have led in IT, it takes an upfront investment," said Gates.

U.S.-based General Electric is one of the top companies on Doerr's list, and Immelt said that its revenue from clean energy products has gone from $5 billion to $20 billion.

"It's created jobs, and it's created competitive advantage," said Immelt, adding that the company plans to increase R&D spending in this area.

The timeline for producing results is years away.

It will take a decade to bring a number of technologies in the pilot stage, and perhaps take 20 years before there is a clear idea what the winning technologies look like, according to those involved in this effort.

GE's CEO Jeff Immelt Declines Bonus for 2nd Year

USA Today

General Electric said Friday that Chief Executive Jeffrey Immelt did not receive a 2009 bonus, the second straight year he gave up extra pay as the industrial and financial conglomerate struggled with one of its worst years on record.

GE's board of directors agreed to Immelt's request not to grant him a bonus even though it concluded he had performed well during a brutal year for the company, according a company filing with the Securities and Exchange Commission. Immelt's last bonus was in 2007 and amounted to $5.8 million.

Last year was painful for GE, which makes everything from kitchen appliances to power plant turbines.

The company's shares fell 80% early in 2009 before recovering somewhat. GE lost its top credit rating due to the struggles of its GE Capital lending unit. Immelt and the GE board cut GE's dividend by 68% to conserve cash and decided to take part in a federally backed program when credit dried up.

"Jeff recognizes that it was a challenging year in which he had to make some difficult decisions that he is convinced were in the best interests of GE but that can only be assessed over a period longer than the last 18 months," GE spokeswoman Anne Eisele said, explaining Immelt's decision not to take a bonus.

However, GE did not leave Immelt empty-handed. He was paid a $3.3 million salary, the same as a year ago, and granted him 150,000 performance share units worth $1.8 million that will convert to GE stock if the company meets certain financial goals. GE also gave Immelt 2 million in stock options Thursday worth between $7 million and $8 million, though those options do not appear on his 2009 pay package.

Overall, Immelt's 2009 pay fell slightly to about $5.6 million, from $5.7 million in 2008. It also fell below the compensation of the four other top GE executives listed on GE's proxy, who all received bonuses.

In a letter to GE shareholders, Immelt said that the "world has been reset" by the sharp economic decline over the past two years. GE is in the process of cutting down the size of GE Capital, which once made up half of the company's overall profits but is still saddled by a big number of bad loans.

GE, which is based in Fairfield, Conn., has turned to its industrial divisions, which make jet engines, oil and gas drilling equipment and power plant turbines to lead it out of the recession. It has also reached a deal with cable operator Comcast to eventually sell its majority stake in NBC Universal, which includes the NBC network.

"GE must be an industrial company first," Immelt wrote.

GE expects that 2010 profits will be roughly flat with the $11 billion it earned in 2009, which was down 37% from 2008.

The company forecasts a growth in earnings beginning in 2011.

The AP's calculations of total pay includes salary, bonus, incentives, perks, above-market returns on deferred compensation and the estimated value of stock options and awards granted during the year. The calculations exclude changes in the present value of pension benefits, and they sometimes differ from totals companies list in the summary compensation table of proxy statements filed with the SEC.

GE's Immelt Lowers Profit Outlook for Industrial Units

As Posted by: Wall Street Journal

Jeffrey Immelt lowered profit projections for General Electric Co.'s industrial businesses -- including jet engines, power turbines and medical equipment -- but said the units should still make money despite the global economic downturn.

Chairman Jeffrey Immelt said GE expects its revenue to fall up to 5% next year as the company's finance unit shrinks amid the credit crisis.

Mr. Immelt declined to offer a corporate-wide earnings forecast for 2009. But his projection for the industrial units for next year, combined with GE's previously announced plan to shrink its finance unit, suggest overall profit at the Fairfield, Conn., conglomerate will decline in 2009 for a second consecutive year.

GE had to lower its earnings forecast several times this year, contributing to a 52% decline in its shares in 2008.

Mr. Immelt said GE had dropped plans for the moment to sell or spin off its unit that includes its light bulb and appliance divisions. Analysts say the operations had generated little interest from potential buyers.

Mr. Immelt said GE had managed the credit crisis and recession better than competitors and would benefit next year from its services businesses and declining materials costs. "We come through this having learned a lot," he told analysts and investors in his annual outlook speech at NBC's studios in New York. "I'd say the environment is toughest for people of my generation. It's the toughest environment we have ever seen."

Mr. Immelt said GE projects its revenue, estimated at $185 billion this year, will decline as much as 5% next year, as it shrinks the finance unit in response to the credit crisis. But he said GE has no plans to divest the unit, which he said still meshes well with other GE businesses. For example, the unit offers financing to buyers of its industrial products.

Mr. Immelt reiterated GE's plan to maintain its annual dividend of $1.24 a share next year. Some analysts have questioned whether the dividend, which now represents almost a 7% yield on GE shares, would consume almost all the company's cash flow, leaving little money for strategic moves and little margin for error.

GE will take $5 billion out of costs in 2009 through restructuring and headcount reductions, Mr. Immelt said.

GE shares rose 97 cents, or 5.7%, to $17.92 in 4 p.m. New York Stock Exchange trading Tuesday, slightly outpacing the gain in the Dow Jones Industrial Average.

Mr. Immelt said profit in GE's industrial units would rise less than 5% next year. That is less than half of GE's October projection of 10%. The segment also includes NBC Universal.

Deane Dray, a GE analyst, called the new projection "reasonable." Other analysts had been projecting profit in GE's industrial units to decline next year. Mr. Immelt said GE will enter 2009 with roughly $55 billion in backlogged orders for industrial equipment, equal to the backlog in July.

Analysts expect GE to post overall earnings of $1.50 a share in 2009, down from GE's projection of $1.78 to $1.84 for this year and $2.20 in profit last year, according to Thomson Reuters.

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