GE Report

Demand Analysis

KEY DEMAND FACTORS

Price and Volume – Strong as they have increased together for about 1.5 years
Institutions and Mutual Funds – OK as 59% ownership leaves some room for growth
Inside Ownership – Good with several recent large purchases

Ratio Comparison

		ACTUALS				5 Year Averages
	2003	2004	2005	2006	2007	Actual	Projection
Valuation
P/E Ratio	18.8	20.6	21.1	18.2	18.8	19.50	19.44
Price to Sales	2.1	2.6	2.4	2.3	2.4	2.36	2.63
Price to EBITDA	7.7	8.6	8.0	7.1	6.8	7.64	7.22
Management Effectiveness
Return on Investment	3.19	3.12	3.57	4.37	3.94	3.64	4.09
Return on Equity	17.66	13.90	14.23	17.37	17.50	16.13	15.36
Financial Condition
Total Debt to Equity	6.13	4.73	4.34	4.41	4.94	4.91	2.74
Interest Coverage	2.91	2.75	2.50	2.28	2.06	2.50	2.20
Profitability
Gross Profit Margin	61.84	54.01	54.84	54.64	58.09	56.68	57.44
EBITDA Margin	27.79	29.98	31.32	32.48	34.78	31.27	36.75
Net Profit Margin	11.18	12.78	11.29	12.75	12.63	12.13	13.73
Dividend
Dividend Yield	2.73	2.42	2.72	2.82	2.17	2.57	1.89
Payout Ratio	0.51	0.50	0.58	0.51	0.41	0.50	0.37
Growth
P/E/G						0.86	2.09

COMPARISONS

Valuation –projected ratios are nearly identical to historical
Management Effectiveness – these ratios are also equal to historical
Financial Condition – projected debt is lower than current levels
Profitability – projections are also very close to current actual ratios
Dividend – even with a projected 10% annual increase the ratios are lower
Growth – lower projected growth still results in a P/E/G near two

Earnings Projections

General Electric Co. (GE)
Earnings Model ($MM)
	2007	2008E	2009E	2010E	2011E	2012E	Forecast
Revenue
Infrastructure	55,038	63,294	72,788	83,706	96,262	110,701	15.0%
Commercial Finance	26,730	28,067	29,470	30,943	32,490	34,115	5.0%
GE Money	24,648	25,880	27,174	28,533	29,960	31,458	5.0%
Healthcare	26,730	28,868	31,178	33,672	36,366	39,275	8.0%
NBC Universal	24,648	25,880	27,174	28,533	29,960	31,458	5.0%
Industrial	16,064	17,028	18,050	19,132	20,280	21,497	6.0%
Other	5,081	5,335	5,602	5,882	6,176	6,485	5.0%
Total Revenues	166,696	194,352	211,436	230,402	251,494	274,989	10.5%
- Direct Operating Expenses	69,867	78,251	87,641	98,158	109,937	123,130	12.0%
Gross Profit	96,829	116,101	123,794	132,244	141,557	151,859	9.4%
Less Operating Expense
Investment & Insurance	3,450	3,726	4,024	4,346	4,694	5,069	8.0%
Total Depreciation & Amort.	9,909	10,801	11,773	12,833	13,988	15,247	9.0%
Other Costs & Expenses	35,410	37,888	40,541	43,378	46,415	49,664	7.0%
Total Expenses & Items	48,769	52,416	56,338	60,557	65,096	69,980	7.5%
EBIT	48,060	63,686	67,457	71,687	76,461	81,880	11.2%
- Interest Expenses	23,377	26,182	29,324	32,843	36,784	41,198	12.0%
Pretax Income	24,683	37,503	38,132	38,844	39,677	40,681	10.5%
- Income Taxes	3,941	6,376	6,483	6,992	7,142	7,729
Discontinued & Accounting	318	(500)	(500)	(500)	(500)	(500)
Net Income	21,060	30,628	31,150	31,352	32,035	32,452	9.0%
Tax Rate	16.0%	17.0%	17%	18%	18%	19%
Dividends Paid	8,593	9,453	10,398	11,438	12,581	13,839	10.0%
EBITDA	58,287	73,987	78,730	84,020	89,949	96,626	10.6%
Shares outstanding (000,000's)	10,230	10,230	10,230	10,230	10,230	10,230	0.0%
Diluted Shares outstanding	10,266	10,266	10,266	10,266	10,266	10,266	0.0%
Earnings Per Share
Basic	$2.06	$2.99	$3.04	$3.06	$3.13	$3.17	9.0%
Diluted	$2.05	$2.98	$3.03	$3.05	$3.12	$3.16	9.0%
Source: estimates

ASSUMPTIONS

All segments except infrastructure projected conservatively below historical
Expenses growth will continue to be less than sales growth

Earnings History

General Electric Co. (GE)
Annual Income Statements ($MM)
	2007	2006	2005	2004	2003	2002	I Yr.	5 Yr.
Revenue
Infrastructure	55,038	47,429	41,803	37,373	31,708	36,381	16.0%	8.6%
Commercial Finance	26,730	23,792	20,646	19,524	18,869	17,781	12.3%	8.5%
GE Money	24,648	21,759	19,416	15,734	12,845	10,266	13.3%	12.7%
Healthcare	16,064	16,562	15,153	13,456	10,198	8,955	-3.0%	12.4%
NBC Universal	14,621	16,188	14,689	12,886	6,871	7,149	-9.7%	15.4%
Industrial	24,514	33,494	32,631	30,722	29,756	28,314	-26.8%	-2.8%
Other	5,081	4,167	3,618	4,596	23,940	23,364	21.9%	-26.3%
Total Revenues	166,696	163,391	147,956	134,291	134,187	132,210	2.0%	4.7%
- COGS	69,867	74,110	66,814	61,759	51,206	52,856	-5.7%	5.7%
Gross Profit	96,829	89,281	81,142	72,532	82,981	79,354	8.5%	4.1%
Less Expenses & Items
Investment & Insurance	3,450	3,214	3,374	3,086	16,369	17,608	7.3%	-27.8%
Total Depreciation & Amort.	9,909	9,158	8,537	8,348	6,956	6,511	8.2%	8.8%
Other Costs & Expenses	35,410	33,003	31,433	29,185	29,320	32,639	7.3%	1.6%
Total Expenses & Items	48,769	45,375	43,344	40,619	52,645	56,758	7.5%	-3.0%
EBIT	48,060	43,906	37,798	31,913	30,336	22,596	9.5%	16.3%
- Interest Expenses	23,377	19,286	15,102	11,616	10,432	10,216	21.2%	18.0%
Pretax Income	24,683	24,620	22,696	20,297	19,904	12,380	0.3%	14.8%
- Income Taxes	3,941	3,954	4,035	3,696	4,315	3,758	-0.3%	1.0%
Discontinued & Accounting	318	163	(1,950)	559	(587)	(1,015)	95.1%	-179.3%
Net Income	21,060	20,829	16,711	17,160	15,002	7,607	1.1%	22.6%
Tax Rate	16.0%	16.1%	17.8%	18.2%	21.7%	30.4%	-0.6%	-12.1%
Dividends Paid	8,593	10,670	9,619	8,528	7,714	7,261	-19.5%	3.4%
EBITDA	58,287	53,227	44,385	40,820	36,705	28,092	9.5%	15.7%
Shares outstanding (000,000's)	10,230	10,359	10,570	10,400	10,019	9,947	-1.2%	0.6%
Diluted Shares outstanding	10,266	10,394	10,611	10,445	10,075	10,028	-1.2%	0.5%
Earnings Per Share
Basic	$2.06	$2.01	$1.58	$1.65	$1.50	$0.76	2.4%	21.9%
Diluted	$2.05	$2.00	$1.57	$1.64	$1.49	$0.76	2.4%	22.0%
Source: General Electric Co. Annual Reports & SEC Filings

NOTES

All areas except industrial have had solid growth for five years
Expenses have decreases over a five year period

Investor Summary

GENERAL ELECTRIC	NYSE:	GE
Conglomerates	TARGET:	$54.76

Stock Data		Sales & Earnings	2007A	2008E	2009E
Price 11/19/2007	$38.65	Revenue (MM)	$166.7	$194.4	$211.4
52-Week Range	33.90 - 42.15	EBITDA (MM)	$58.3	$74.0	$78.7
Dividend Yield	2.2%	EPS (diluted)	$2.05	$2.98	$3.03

Capitalization		Value Measures
Shares Outstanding (MM)	10,230.00	Price/Earnings	18.84	15.42	18.05
Market Capitalization (MM)	$395.4	Price/Sales	2.38	2.43	2.68
Debt/Equity	4.94	Price/Book	3.30

Projections		Growth (5 Yr.)	Historical	Projected
12-Month Price Target	$46.01	Earnings	22.0%	9.0%
24-Month Price Target	$54.76	P/E/G	0.86	2.09
Annual Total Return	21.2%

KEY AREAS FOR GROWTH

Alternative Energy Sources – manufactures a wide range of turbines and generators for hydroelectric and wind power along with solar panels
Development of Wind Energy – leading producer of wind turbines
Development of Solar Energy - manufactures solar modules
Medical Testing Equipment – manufacture many high-end imaging systems
Emerging Market Electrical Power – manufactures electrical distribution and control products
Emerging Market Consumer Products & Financial Services – manufactures electric appliances and sells life insurance in China
Renewed Interest in Nuclear – provides a full range of services for nuclear plants
Clean Coal Technology – manufactures a gasification process to produce low emissions
Railroads – leading manufacturer of diesel locomotives
Environmental Cleanup & Preservation – municipal and industrial water and air quality products

MAJOR RISK
Environmental ghosts from bygone eras could comeback to haunt the company.

Mike Shinn for www.fizone.com
December 2007