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Do you want Jack Welchs job?. Spot the pattern... 1.Doug Ivester 2.Bob Ayling 3.Dale Morrison 4.Durk Jager.

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Presentation on theme: "Do you want Jack Welchs job?. Spot the pattern... 1.Doug Ivester 2.Bob Ayling 3.Dale Morrison 4.Durk Jager."— Presentation transcript:

1 Do you want Jack Welchs job?

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

3 Dont let this happen to you Strategos Proprietary and Confidential STRATEGOS

4 Defying gravity... 1.The law of large numbers

5 Market cap giants:

6 Market value superstars: Market value ($ billions)

7 The P/E escalator: Average P/E for the S&P 500 Source: Compustat

8 Projected market value ($ billions) Market value superstars:

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

10 Defying gravity... 1.The law of large numbers 2.The law of diminishing returns

11 Diminishing Returns? GEs Revenue/Employee

12 Diminishing Returns? GEs Revenue/Employee

13 Flat-lining? GEs net margins

14 Unisys Amerada Hess Adobe Systems Eastman Kodak Northrop Grumman Marriott International AMR Allstate Hershey Foods Sara Lee Xerox New York Times Cigna Marriott Intl Source: S&P Compustat; Strategos calculations Income Growth (%) Revenue Ratio of Inc/Rev How long?

15 Ratio of: CAGR Net Income CAGR Revenue Median for the S&P 500: Median for firms where initial ratio was > 5.0:

16 Merger mania (Worldwide merger activity, $ billion)* Source: Securities Data Corp

17 Merger mania: Source: Salomon Smith Barney and Thomson Financial Securities Data

18 Average operating margin for the S&P 500:

19 Trends in IT: Standard platforms Outsourcing IT Consulting Web Hosting ExchangesASPs

20 Defying gravity... 1.The law of large numbers 2.The law of diminishing returns 3.The law of averages

21 How long will this last? GEs P/E Ratio (as of )

22 The challenge of sustaining high shareholder returns: ( ) 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 Defying gravity... Divide and divide againDivide and divide again

24 Is this how you see your company?

25 Or is this how you view your company?

26 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 Defying gravity... Divide and divide againDivide and divide again Find new wealth-creating strategiesFind new wealth-creating strategies

28 Alchemy: Akami Ariba ARM Brocade Comm Commerce One Inktomi Phone.com Redback Networks Rambus Sycamore Networks VeriSign MarketValueAnnualRevenue MillionsBillions

29 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 Defying gravity... Divide and divide againDivide and divide again Find new wealth-creating strategiesFind new wealth-creating strategies Become less averageBecome less average

31 Sails and anchors at GE Profits ($ millions)


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