1. gh@strategos.com Do you want Jack Welchs job?

2. gh@strategos.com Spot the pattern... 1.Doug Ivester 2.Bob Ayling 3.Dale Morrison 4.Durk Jager

3. gh@strategos.com Dont let this happen to you Strategos Proprietary and Confidential STRATEGOS

4. gh@strategos.com Defying gravity... 1.The law of large numbers

5. gh@strategos.com Market cap giants:

6. gh@strategos.com Market value superstars: Market value ($ billions)

7. gh@strategos.com The P/E escalator: Average P/E for the S&P 500 Source: Compustat

8. gh@strategos.com Projected market value ($ billions) Market value superstars:

9. gh@strategos.com Do trees grow to the sky? Projected market value ($ trillions) Combined value of shares listed on NYSE.

10. gh@strategos.com Defying gravity... 1.The law of large numbers 2.The law of diminishing returns

11. gh@strategos.com Diminishing Returns? GEs Revenue/Employee

12. gh@strategos.com Diminishing Returns? GEs Revenue/Employee

13. gh@strategos.com Flat-lining? GEs net margins

14. gh@strategos.com Unisys383.22.0195.7 Amerada Hess493.76.674.6 Adobe Systems3668.469.952.5 Eastman Kodak151.33.938.5 Northrop Grumman1280.034.037.6 Marriott International100.03.926.0 AMR187.79.919.0 Allstate462.225.618.1 Hershey Foods149.910.114.8 Sara Lee409.028.814.2 Xerox79.37.810.3 New York Times115.87.814.9 Cigna 40.72.814.6 Marriott Intl.19.71.414.0 Source: S&P Compustat; Strategos calculations Income Growth (%) 1994-1999Revenue 1994-1999 Ratio of Inc/Rev1994-1999 How long?

15. gh@strategos.com 1993-19961996-1999 Ratio of: CAGR Net Income CAGR Revenue Median for the S&P 500: Median for firms where initial ratio was > 5.0: 1.11.0 10.50.8

16. gh@strategos.com Merger mania (Worldwide merger activity, $ billion)* Source: Securities Data Corp

17. gh@strategos.com Merger mania: Source: Salomon Smith Barney and Thomson Financial Securities Data

18. gh@strategos.com Average operating margin for the S&P 500:

19. gh@strategos.com Trends in IT: Standard platforms Outsourcing IT Consulting Web Hosting ExchangesASPs

20. gh@strategos.com Defying gravity... 1.The law of large numbers 2.The law of diminishing returns 3.The law of averages

21. gh@strategos.com How long will this last? GEs P/E Ratio (as of 18.8.00)

22. gh@strategos.com The challenge of sustaining high shareholder returns: (1990-1999) Number of years in which total shareholder returns exceeded the 75th percentile for the S&P 500 exceeded the 75th percentile for the S&P 500 Source: S&P Compustat; Strategos calculations Number of companies Compaq Home Depot Intel Oracle

23. gh@strategos.com Defying gravity... Divide and divide againDivide and divide again

24. gh@strategos.com Is this how you see your company?

25. gh@strategos.com Or is this how you view your company?

26. gh@strategos.com How do you see your company? My company = a business model My company = an industry leader My company = an earnings factory My company = an opportunity generating machine

27. gh@strategos.com Defying gravity... Divide and divide againDivide and divide again Find new wealth-creating strategiesFind new wealth-creating strategies

28. gh@strategos.com Alchemy: Akami7.24.0 Ariba40.045.4 ARM11.862.1 Brocade Comm.24.968.7 Commerce One11.233.6 Inktomi15.071.2 Phone.com7.913.4 Redback Networks22.564.3 Rambus7.543.4 Sycamore Networks3.311.3 VeriSign35.384.8 MarketValueAnnualRevenue MillionsBillions

29. gh@strategos.com Innovation pathways: CoreRenewal White Space Businesses SpinOuts Potential for Leverage Difficulty Virgin Virgin Enron Schwab SpinIns Cisco Cisco PortfolioShuffles C&W C&W Under-utilized strategies for GE

30. gh@strategos.com Defying gravity... Divide and divide againDivide and divide again Find new wealth-creating strategiesFind new wealth-creating strategies Become less averageBecome less average

31. gh@strategos.com Sails and anchors at GE Profits ($ millions)