November 6, 2009

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294 David Abrameto • [email protected] • +1-212-823-3983 Laura Parke • [email protected] • +1-212-823-3741

GE: "Valumagination" - Upgrading to Outperform on Reduced Risk, Portfolio, Capital, and Infrastructure Upside; $19 Target Rating Change / Target Price Change / Estimate Change in Bold

Ticker

Rating

CUR

O M

USD

GE OLD SPX

11/4/2009 Closing Price 14.19

Target Price 19.00 18.00

YTD Rel. Perf. -28.3%

1046.50

EPS 2008A 1.78 65.47

2009E 1.01 1.00 60.96

P/E 2010E 0.97 1.04 76.85

2008A

2009E

2010E

8.0

14.0

14.6

Yield 2.8%

16.0

17.2

13.6

2.4%

O – Outperform, M – Market-Perform, U – Underperform, N – Not Rated

Highlights

We are upgrading GE to outperform. Why now? In our view, the risk/reward balance has improved enough to warrant a more positive stance. We believe the risk GE Capital poses is reduced, 2010 earnings achievability is high, and there is more upside across the company into 2011. We think the potential for dilution is limited and despite the potential for higher capital requirements, believe that resolution of the current regulatory discussions will remove on-going over hangs for the stock. In this note, we revisit the risk/reward balance for GE in light of the Q3 10Q which was released this week, GE Capital developments and our expectations for the impact of the global economic recovery. We also provide an update to both our GE industrial and GECS earnings models. We are upgrading our rating on GE to outperform and raising our target price to $19 for 6 reasons:

U.S. Multi-Industry

• 1) We believe 2010 Earnings of 97 cents is achievable with limited downside and unlikely to experience significant downward revisions (excluding M&A). We are 5 cents above consensus in 2010 and 10 cents above consensus in 2011. The 97 cents in 2010 is made up of 82 cents from the industrial businesses, down 4 cents from 2009 and 15 cents from GE Capital, down 1 cent from 2009. Why do we think this is conservative? − On the industrial side of the business, we take infrastructure equipment revenues (with ~8-9% margins) down 10-15% and service revenues (with ~27% margins) up 5%, resulting in $77B of revenue and $13.4B of segment profit in 2010 (down $2B and $400M respectively). − GECS total assets decline 10% in 2010 and net charge offs increase to 2.95% of receivables in 2010 but fall to 2.47% in 2011, driving provisions, based partially on NTM losses, from 2.9% in 2009 to 2.7% in 2011. GECS ROE for 2010 is just 2.2% and ROA 0.2%. We also increase the tax rate from a beneficial (negative) 6% in 2009 to a more normal 14% in 2010 and corporate expenses up to $3.6B with pension up to $1.3B. • 2) We forecast impairments of just $1.2B in 2010 and see reduced risk of large scale write-downs and major equity dilution due to GE Capital. While we fully acknowledge GE Capital is going to be a highly regulated NBFI, we see reduced risk in GE Capital's businesses emerging from current regulatory discussions and the company's ability to manage through commercial real estate and other financial crises over the next two years – this means while there are still going to be write downs, they will be contained. GECS lower level of leverage also reduces the need for significant further equity injections.

See Disclosure Appendix of this publication for important disclosures and analyst certifications.

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

• 3) GE Capital earnings growth from $1.5B in 2010 to $3.7B in 2011. In concert with reduced risks, we also see earnings tailwind in store for GE Capital based on "new normal" ROA (0.7% in 2011) that are below historical levels but better than today. These come from a) $2B of provisions tailwind as net charge offs peak in 2010; b) headcount and other cost reductions executed in 2008-10; c) lower cost of funds due to government backed TLGP; and d) pricing improvement on new originations. Even with these changes, we target relatively conservative ROE and ROA that don't hit "new" normal levels until mid 2011. • 4) An infrastructure rebound in 2011/12, fueled by an industrial recovery and increasing emerging markets exposure, should drive 6-7% revenue and 8-10% earnings growth. We believe that focus is continuing to shift to GE's "industrial" businesses. We expect to see steady earnings growth in the industrial businesses, increasing from $8.8B in 2010 to $11.2B by 2012. Our industrial growth in EPS from a trough of $0.82 in 2010 to $1.09 by 2012 is driven by 1) 6.7% revenue CAGR; 2) 130 bp of segment margin expansion after corporate expenses (restructuring, pension); 3) stable industrials tax rate in the 25% range and 4% fewer shares. This level of industrial profitability before tax pegs 2010 at roughly levels a bit above 2004, 2011 levels are between 2006 and '07 and 2012 levels above the 2008 peak. • 5) We see GE shedding businesses with some $25-30B of revenue over the next 2-3 years and the portfolio changing for the better. Much of GE's intent with the portfolio is clear - to invest in core and adjacent infrastructure businesses – the challenge is execution. But this becomes more practical in a recovery as buyers and sellers close valuation gaps. − What's out on the Industrial side? Most of Consumer & Industrial, Enterprise Solutions and even NBC Universal – that is somewhere north of $28-30B in revenue and $3-4B of segment profit. What about on the Capital side? Much of Consumer and selective pieces of the other businesses – or at least reductions in originations.

U.S. Multi-Industry

− We think this means that much of the bet on GE is a bet on the company's ability to re-invest proceeds in enterprises that add value for shareholders. We anticipate increasing dividends and share repurchases of course. But acquisitions will be key. We think staying closer to what they do best (scale, technology, service) will have a higher chance of success than some prior efforts. The track record is clearly mixed – Enron wind was a great story. Interlogix and Edwards were not. And there are many more examples. Going forward, we have more confidence in GE picking the right core/adjacent strategic properties and integrating them successfully – we point to the recent bid for Areva's Transmission and Distribution business, even if they don't win it. • 6) More than 2:1 upside/downside valuation trade-off is compelling. Even with just a 15x multiple on 2011/12 earnings from the industrial businesses and 8x normalized earnings from GE Capital in the same time-frame, we get to nearly $15 for GE's industrial businesses and $4 for GE Capital. For context, this would place GE at roughly 50% of its peak historical market capitalization. Our current downside scenario is still 30% off of 2011/12 EPS in a plausible scenario which would reduce valuation to $12-13 vs. our target price of $19. On current stock price of $14, this suggests more than 2:1 upside/downside. Investment Conclusion

We are upgrading GE from market-perform to outperform and raising the target price from $18 to $19. In our view, the risk/reward balance has improved enough (>2:1 upside/downside) to warrant upgrading the stock from the current $14 range. We believe the risk GE Capital poses is reduced, the consensus 2010 earnings achievability is high and there is significantly more upside across the company into 2011. We think the potential for dilution is limited and despite the potential for higher capital requirements, believe that resolution of the current regulatory discussions will remove on-going over hangs for the stock. We do

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

anticipate the dilutive impact of de-consolidating NBCU in the next year or so and management's ability to invest in accretive core acquisitions over a longer time period. Details

We're upgrading GE for 6 reasons: 1) We believe 2010 Earnings of 97 cents is achievable with limited downside and unlikely to experience significant downward revisions (excluding M&A).

We are 5 cents above consensus in 2010 and 10 cents above consensus in 2011. The 97 cents in 2010 is made up of 82 cents from the industrial businesses, down 2 cents from 2009 and 15 cents from GE Capital, down 1 cent from 2009 (Exhibit 3). Why do we think this is conservative? − On the industrial side of the business, we take infrastructure equipment revenues (with ~8-9% margins) down 10-15% and service revenues (with ~27% margins) up 5%, resulting in $77B of revenue and $13.4B of segment profit in 2010 (down $2B and $400M respectively) (Exhibit 5). − GECS total assets decline 10% in 2010 and net charge offs increase to 2.95% of receivables in 2010 but fall to 2.47% in 2011, driving provisions, based partially on NTM losses, from 2.9% in 2009 to 2.7% in 2011 (Exhibit 6). GECS ROE for 2010 is just 2.2% and ROA 0.2% (Exhibit 7). We also increase the tax rate from a beneficial (negative) 6% in 2009 to a more normal 14% in 2010 and corporate expenses up to $3.6B with pension up to $1.3B. Exhibit 2 EPS Estimates: SCB vs. Consensus

Exhibit 1 Revenue Estimates: SCB vs. Consensus

GE EPS

GE Revenue 159.1 158.9

160

1.40

158

1.01 0.99

155.7 154.9

1.00 153.3

154

0.97 0.92

0.80

152

0.60

151.2

150

0.40

148

0.20

146

U.S. Multi-Industry

1.20

$

$B

156

1.30

1.20

0.00 2009E

2010E SCB

Consensus

Source: Thomson One Analytics and Bernstein analysis

2011E

2009E

2010E SCB

2011E

Consensus

Source: Thomson One Analytics and Bernstein analysis

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 3 Annual EPS Forecast Breakout Between Industrial and GE Capital

EPS, Forecast, annual

2.50 2.00 1.22

$/share

1.50

0.73 0.62

0.77

0.98 0.84

0.35

1.00 0.50

0.16

0.15

0.86

0.82

0.79

0.88

0.98

1.01

2005

2006

2007

2008 2009E GE Industrial

0.95

1.09

1.20

2011E

2012E

2013E

2010E GE Capital

Source: Company reports and Bernstein estimates

Exhibit 4 GE Consolidated Revenue Forecast

GE Consolidated Revenue 200,000

182,515 172,488

180,000 160,000

151,568

155,721

151,167

2009E

2010E

159,133

165,747

172,184

140,000 120,000 100,000

U.S. Multi-Industry

80,000 60,000 40,000 20,000 2006

2007

2008

2011E

2012E

2013E

Source: Company reports and Bernstein estimates

4

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 5 Although equipment volume declines will hurt equipment margins, product mix shift towards services should actually improve margins in 2010E Revenue and margin walk for Technology and Energy Infrastructure Segments, 2009E to 2010E 2010E equipment revenue and profit $47B -$8B $31B +$8B $39B

2010E services revenue and profit

'09E equipment backlog 2/3 converts to revenue in '10E '10E revenue from backlog '10E revenue from in-year orders '10E equipment revenue

$36B 5% $38B

2010E total revenue and profit

'09E services revenue 10E services revenue growth '10E services revenue

$77B total equip & svcs revenue $13.4B Total equip & svcs profit 17.4% Total equip & svcs margin

27.0% '10E services margin (no change YoY) $10.3B '10E services profit

9.0% '09E equipment margin -1.0% '10E margin degredation 8.0% '10E equipment margin $3.1B '10E equipment profit Source: Bernstein estimates

Provision rate vs NTM NCO rate 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5%

U.S. Multi-Industry

NTM NCO rate

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

0.0% 19 98

% of avg gross financing receivables

Exhibit 6 Provision rate and NTM NCO rate forecast

Provision rate

Source: Company reports and Bernstein estimates

5

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 7 GECS ROE and ROA

GECS ROE and ROA 25%

2%

20%

2%

15%

1%

10%

1%

5%

ROE

ROA

3%

0%

0% 2004

2005

2006

2007

2008

GECS ROA (left axis)

2009E

2010E

2011E

2012E

2013E

GECS ROE (right axis)

U.S. Multi-Industry

Source: Company reports and Bernstein estimates

6

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 8 Earnings walk, from segment profit to earnings for GE Industrial and GE Capital

Segment profit

GE Industrial Aviation Healthcare Transportation Enterprise Solutions & other Energy Infrastructure NBCU Consumer & Industrial Total Industrial segment profit Industrial corp items & elims Industrial interest expense Industrial minority interest Industrial EBT Industrial tax expense Industrial minority interest Preferred dividends Industrial earnings to common

Segment profit

GE Capital CLL Consumer Real Estate GECAS Energy Financial Services Total GECS segment profit GECS corp items & elims GECS earnings, cont ops Consolidated GE earnings

2008 3,684 2,851 962 655 6,080 3,131 365 17,728 (1,833) (2,153) 410 14,152 (3,427) (410) (75) 10,240

2009E 3,993 2,273 805 402 6,340 2,437 363 16,614 (2,861) (1,438) 29 12,344 (2,893) (29) (300) 9,122

$M 2010E 3,939 2,360 729 372 5,958 2,734 446 16,536 (2,871) (1,485) 255 12,435 (3,109) (255) (300) 8,771

2011E 4,374 2,540 830 411 6,380 3,119 564 18,218 (2,970) (1,523) 330 14,055 (3,514) (330) (300) 9,911

2012E 4,746 2,772 915 460 6,809 3,417 650 19,767 (2,752) (1,563) 384 15,836 (3,959) (384) (300) 11,193

per share 2012E 0.46 0.27 0.09 0.04 0.66 0.33 0.06 1.93 (0.27) (0.15) 0.04 1.54 (0.39) (0.04) (0.03) 1.09

2008 1,805 3,664 1,144 1,194 825 8,632 (858) 7,774

2009E 706 1,903 (1,490) 950 221 2,290 (648) 1,643

$M 2010E 543 2,388 (1,705) 792 259 2,276 (729) 1,547

2011E 1,142 2,083 (441) 1,007 327 4,117 (430) 3,688

2012E 2,059 2,560 503 1,305 583 7,009 (548) 6,461

per share 2012E 0.20 0.25 0.05 0.13 0.06 0.68 (0.05) 0.63

10,765

10,319

18,014

13,599

17,654

1.72

Source: Company reports, Bernstein estimates

U.S. Multi-Industry

2) We forecast impairments of just $1.2B in 2010 and see reduced risk of large scale writedowns and major equity dilution due to GE Capital.

While we fully acknowledge GE Capital is going to be a highly regulated NBFI, we see reduced risk in GE Capital's businesses emerging from current regulatory discussions and the company's ability to manage through commercial real estate and other financial crises over the next two years – this means while there are still going to be write downs, they will be contained. GECS smaller scale and lower level of leverage also reduces the need for significant further equity injections. Increasing regulation whatever compromise legislation passes but we do not anticipate a forced split

As stated previously, we view the likelihood of a legislatively forced split extremely remote. The latest points of difference in Washington across the House and Administration versus Senate versions of the legislation appears to be centered on the role of a mega-regulator compared with existing regulators. Although the Senate draft has not been released, we understand that it similarly calls for increased regulation but does not intend to drive a forced split of financial companies from industrial companies. The House/Administration's Discussion Draft of the "Financial Stability Improvement Act of 2009"(FSIA) drives significantly more regulation and scrutiny for GE Capital (assuming it is marked a systemically risky

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

financial institution) but stops short of forcing any kind of separation or regulation of the industrial parent company. As far as additional equity requirements, the Act lays out guidelines, but the ultimate capital requirement decisions will rest with the regulatory authorities under the new regime. GE Capital is likely to be identified as a "financial company for heightened prudential standards for financial stability purposes." Although the document dispenses with language regarding "tier 1" financial institutions that we had heard in prior versions, including the mid-summer, Bank Holding Company Modernization Act, it sets out criteria for companies that are affected by this legislation. • The Financial Services Oversight Council would subject financial companies where "material financial distress could pose a threat to financial stability or the economy" • The criteria include 1) the amount/nature of company's financial assets; 2) liabilities / reliance on short term funding; 3) extent and nature of off balance sheet exposures; 4) transactions/relationships with other financial companies; 5) importance as source of credit for households, businesses, governments, liquidity for the financial system; 6) nature/scope/mix of company's activities and 7) "any other factors that the Council deems appropriate." GE Capital meets most of these but certainly 1, 2, and 5. Under this draft of the FSIA, GE Capital will be the regulated company and not GE the parent company. Pages 105 – 114 lay out "Section 6" Special Purpose (Intermediate) Holding Companies that we believe would define the holding structure similar to GE Capital Services. There is no implied or explicit mention of forcing a separation between financial holding companies and industrial parents. In fact, the FSIA defines within Section 6 the "Limitations on Authority of Commercial Parent" that appears to clearly distinguish between regulation of the financial holding company and the commercial parent. • (The commercial parent) "shall (A) not be deemed to be, or treated as, a bank holding company, solely because of its ownership or control of a section six holding company; and, (B) not be subject to this Act, except for such provisions as are explicitly made applicable in this section." • The FSIA also requires "independence of a Section 6 Holding Company" where "no less than 25% of the members of the board of directors…shall be independent of the parent company."

U.S. Multi-Industry

• In addition, the FSIA appears partially to grandfather companies that were unitary savings and loan holding companies prior to May 1999 (pages 98-101) but subject to significant regulatory discretion with regard to loss of that exemption GE Capital's current regulator, The Office of Thrift Supervision, will be "Abolished" in the Act and replaced by other regulators, including the Office of the Comptroller of the Currency within the Department of the Treasury for Federal savings associations, the FDIC for State savings associations, and the Fed for banks and financial holding companies. Although GE has its savings and loan subsidiaries, we suspect the Fed will play the primary regulatory role in the legislation as it stands. This topic of who has power over what is likely to be one that changes significantly before final legislation. The FSIA requires the Fed to heighten standards for financial holding companies with regard to 1) risk based capital requirements; 2) leverage limits; 3) liquidity requirements; 4) concentration requirements; 5) prompt corrective action requirements; 6) resolution plan requirements and 7) overall risk management requirements. In addition, the Fed is free to impose any other standards they deem advisable to mitigate systemic risk. Section 1107 also provides for the "regulation of identified activities for financial stability purposes" which provides significant discretion to regulators. There is also a provision for "restricting transactions with affiliates" which could impact GECAS, EFS and the other verticals from financing GE equipment but we understand that is not the intention (imagine CAT finance not being able to finance CAT equipment – very unlikely!) and to the extent that the language persists, exceptions will be added.

8

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Specific quantified capital requirements are still to come, if at all, in the legislation. The Fed is given wide latitude to "specify for each relevant capital measure the levels at which an identified financial holding company is well capitalized, undercapitalized, and significantly undercapitalized." The draft legislation does describe the ratio of tangible equity to total assets at which a company is "critically undercapitalized" as TCE "not less than 2% of total assets" (GE is roughly 6% as of 3Q09) but the other limits and measures are not yet defined (pages 26-27). • The FSIA goes into detail about what happens to companies who fall below these thresholds, including capital restoration plans, restricted asset growth, capital distributions, acquisitions, compensation etc. It would seem that as long as regulators are satisfied with GECS' minimum capital then they could distribute dividends to GE. • This is the next big regulatory question in our view for GE Capital – how will GE Capital's new regulators view their minimum capital requirements – and it is entirely possible that this will not be disclosed, if at all, until after the bill passes into law and agencies execute their review process. There is a minimum 3 year transition period in the FSIA with regard to implementing concentration limits on credit exposures set by the Fed. The Fed also can extend the transition period by 2 additional years "to promote financial stability." Although it is early stages in the legislative process, the FSIA in its 1st draft removes some uncertainty about the future for GE Capital. While we do not yet know what the minimum capital requirements and leverage limits are going to be, it is clear that GE and GE Capital can co-exist with the Section Six holding company structure. It is also clear that GE Capital is going to be regulated very closely by new regulators under much heightened standards, whatever compromise legislation passes. This may slow down the "new normal" growth but on balance, we anticipate this will be positive for the long term health of GE Capital – it will create more transparency and perhaps reduce uncertainty with regard to large scale risks in the business. Smaller Scale, Smaller Risk

U.S. Multi-Industry

GE Capital has been actively shrinking its balance sheet in response to the global credit crisis and recession since 3Q08, after gross financing receivables reached a peak of $428B in 2Q08. Since then, the company has pledged to run a smaller and safer business that will ultimately constitute 1/3rd of GE's earnings power. So far, they seem to be on that path, with receivables falling 17% since 2Q08 to $356B. We estimate receivables to will continue to fall at an 8% CAGR until they reach about $260B, a level we believe the company is roughly targeting. See Exhibit 9 for a receivables forecast.

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

450 400 350 300 250 200 150 100 50 -

360 271

290

383

363

312

CAGR: -8.2% 333 301

272

229

258

20 13 E

20 12 E

20 11 E

20 10 E

20 09 E

20 08

20 07

20 06

20 05

20 04

20 03

191

20 02

20 01

19 99

163

143

20 00

131

116

19 98

$B

Exhibit 9 Financing receivables, forecast

Source: Company reports, Bernstein estimates

Similarly, debt outstanding is also expected to fall over the next few years. Following the commercial paper market crisis in late 2008, GE Capital has aggressively reduced its reliance on the short-term issuance, down from 16% of total borrowings in 3Q08 to 10% in 3Q09. Given management's target of about $50B in CP outstanding going forward, we believe their reliance on CP has reached a equilibrium by now. We expect total debt to decline at a 9% CAGR over the next few years, after 2009's debt issuance binge on FDIC-guaranteed debt. See Exhibit 10 for a debt outstanding forecast. The smaller scale of GE Capital will enhance the safety of the business by making it smaller relative to GE the parent, an important point given that the parent company implicitly acts as an equity backstop for the company through its income maintenance agreement. The parent will be more capable of supporting GE Capital through credit cycles when the size of the company shrinks. Exhibit 10 GECS debt, forecast 600 CAGR: -8.8%

500

$B

U.S. Multi-Industry

400 300

366

200 100

255

273

150

207

94

107

117

79

92

96

106

101

82

82

86

91

97

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

78

-

Commercial Paper (avg)

421

449

303

86

61

428

49

374

47

326

307

47

46

2008 2009E 2010E 2011E 2012E 2013E

Other Debt (avg)

Source: Company reports, Bernstein estimates

GE Capital is also de-levering itself after a three year period of increasing leverage. GECS' TCE/TA ratio fell to 3.8% in 2008 from a recent high of 5.2% in 2006. This smaller equity buffer was a significant

10

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

concern for investors and us in evaluating the company's ability to weather the crisis. Today, GECS has a 6.2% TCE/TA, a significantly stronger capital buffer. The company is actively de-leveraging itself by hoarding cash collections (instead of re-deploying it) and halting dividend payments to the parent company. We expect the slower originations will continue for some time as the company shrinks portfolio (particularly Consumer), but we anticipate a return to dividend payments as the company again becomes profitable, as early as mid-2010. We forecast GECS to have equity buffers in excess of previous highs (see Exhibit 11 and Exhibit 12 for forecasts of equity buffer ratios). Exhibit 11 GECS TCE/TA forecast 8%

7.2%

7%

6.2%

6%

6.9%

5.2% 5.2%

5%

3.9%

4% 3%

7.4%

6.5%

4.5%

4.3%

3.8%

3.0% 2.1%

2%

2.3% 2.4% 1.7%

1% 0% 1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008 2009E 2010E 2011E 2012E 2013E

Source: Company reports, Bernstein estimates

Exhibit 12 GECS (TCE + LLR) / Receivables forecast 16% 13.2% 13.4%

14% 10.5% 10.7% 10.7%

12% 9.5% 10% 7.5%

U.S. Multi-Industry

8%

14.3% 14.6%

13.6%

9.7% 8.2% 7.8%

8.2% 8.2% 6.8%

6% 4% 2% 0% 1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008 2009E 2010E 2011E 2012E 2013E

Source: Company reports, Bernstein estimates

Commercial Real Estate Risk

For the CRE equity portfolio ($33.4B in assets), we expect revenue to assets to stay depressed over the next 2-3 years (see Exhibit 13). A lack of profitable exit opportunities in the wake of the real estate bubble crash

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

means this business will not have the profit-making potential it once did in the near to medium term. The business has unrealized losses of $5B as of 2Q09, and the company plans to mitigate these losses over time through depreciation of its assets of about $1B per year. In addition, asset impairment charges $500M to $1B per year are also reasonable to expect from this business over the next few years. Many investors have suggested that GE's equity CRE portfolio has a market value well under the book value of $33.4B. This may well be true, and if GE had to sell its portfolio immediately, the realized losses could be on the order of $10B or more. But, in reality, this is a very unlikely scenario for several reasons: 1) GE has stated several times its intent to hold its properties until a gain can be realized, 2) depreciation of $1B per year and impairments of $500M per year will over time slowly realize the losses that are embedded in the assets, a preferable way to realize losses from GE's perspective, and 3) accounting rules demand that GE assign book values for its portfolio based on expected cash flow analysis, not market values, which are based on occupancy and rental rates. The accounting treatment of the properties is key to the slow rate of impairments for the portfolio, because many of the tenants GE keeps are on long contracts, and therefore vacancies only form over time. It is the new vacancies and lower market rents that reduce the cash flow valuations of the properties and since these are arising slowly (as opposed to all at once), the impairments are realized slowly as well. Hence, risk of a large one-time marking to market of the portfolio is essentially a non-issue. Exhibit 13 We expect the CRE equity portfolio to generate much lower revenue/assets over the next 2-3 years

CRE Equity Book revenue/assets

Revenue/assets

14% 12%

11.7%

12.2%

11.5%

11.5% 10.0%

9.6%

10%

8.4%

8%

6.2%

6%

4.7%

5.0%

2009E

2010E

4% 2% 0% 2004

2005

2006

2007

2008

2011E

2012E

2013E

U.S. Multi-Industry

Source: Company reports, Bernstein estimates

As of the 3rd quarter, GECS assets are broken down in the following exhibit.

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 14 GECS Balance Sheet Asset Breakdown As of 3Q'09 Cash

56.9

Investments U.S. Corporate State and muni RMBS CMBS Other ABS Foreign corp Foreign govies U.S. govies Retained interests Equity securities

52.7 23.4 2.1 3.4 2.5 2.7 1.7 3.4 3.6 8.4 0.8

Goodwill CLL Consumer Real Estate Energy Financial Services GECAS

28.2 13.6 11.1 1.2 2.1 0.2

Other intangibles, net

Financing receivables, gross CLL Americas Europe Asia Other Consumer Non-US resi mortgages Non-US install & revolve US install & revolve Non-US auto Other Real Estate Energy Financial Services GECAS Other (securitized) Allowance for losses

348.5 147.5 92.3 40.4 14.1 0.8 136.4 61.3 25.2 22.3 14.4 13.2 45.5 8.3 15.0 3.1 (7.4)

PP&E GECS land, buildings, etc** Leased aircraft** Leased vehicles** Leased rolling stock** Leased other**

58.7 4.1 29.6 16.6 2.7 5.7

Other assets Real Estate equity investments Associated companies** Other investments** Derivative instruments** Other assets**

87.9 32.9 19.2 13.4 12.4 10.0

Assets held for sale Assets of discontinued ops Total assets

Other receivables

1.2 1.5 658.3

18.6

3.8

** Estimated Source: Company reports, Bernstein estimates

3) GE Capital earnings growth from $1.5B in 2010 to $3.7B in 2011.

In concert with reduced risks, we also see earnings tailwind in store for GE Capital based on "new normal" ROA (0.7% in 2011) that are below historical levels but better than today. These come from a) >$2B of provisions tailwind as net charge offs peak in 2010; b) headcount and other cost reductions executed in 2008-10; c) lower cost of funds due to government backed TLGP; and d) pricing improvement on new originations. Even with these changes, we target relatively conservative ROE and ROA that don't hit "new" normal levels until mid 2011.

U.S. Multi-Industry

Our forecast for GE Capital model includes $0.20 of EPS tailwind in 2011 (see Exhibit 15). We expect 2010 to be essentially flat versus 2009, with $0.15 of EPS, and 2011 to be the earnings jump to $0.35.

13

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 15 We forecast $0.37 of EPS tailwind from GE Capital earnings in 2011

GE Capital EPS, annual forecast 1.40

1.22

1.20 0.98

$/share

1.00 0.77

0.80 0.60 0.40

0.32

0.38

0.44

0.52

0.78

0.84

0.77

0.73 0.62

0.56 0.46 0.35 0.16

0.20

0.15

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

-

Source: Company reports, Bernstein estimates

U.S. Multi-Industry

We have confidence in our earnings forecast for GE Capital largely due to conservative assumptions around ROE and ROA for the company going forward. From 1997 through 2008, GE Capital had averaged a 19% ROE. In 2009 we expect a 3% ROE and we see it falling to 2% in 2010. In 2011, we forecast ROE rising to 5%, not reaching its "normal" potential of about 10-11% until 2013, due to lingering losses we expect to plague commercial real estate (CRE) through 2010 in the form of reserve building-related expenses as well as slower than typical reserve release due to anticipated regulatory scrutiny. The primary reason why the new normal ROE is nearly half of the old is twofold: 1) lower leverage – we forecast a net debt/equity ratio of 5.0x by 2012, down from a 7.9x average from 1997-2008 and the recent peak of 9.0x in 2008, and 2) lower profitability due to more regulation, stricter and less flexible lending rules, lingering losses through asset impairments (mainly CRE), exists from previously very profitable consumer lending, and potentially higher tax rates. Our ROE forecast for GE Capital is shown in Exhibit 16. Leverage ratio (TCE/TA and Net debt/equity) forecasts are shown in Exhibit 17 and Exhibit 18.

14

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 16 Our ROE forecast well below historical average levels

GECS: ROE, annual 30% 24%

25%

22%

20%

22%

22%

21% 19%

1997-2008 avg: 19.1%

19%

19% 16%

17%

14%

15%

14% 11% 9%

10% 5% 5%

3%

2%

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

0%

Source: Company reports, Bernstein estimates

Exhibit 17 GE Capital's equity buffer is expected to get stronger…

Exhibit 18 … as it lowers leverage below historic levels

TCE/TA

8.0%

7.4% 7.2% 6.9% 6.5% 6.2%

7.0% 6.0%

4.3% 3.9%

9.0 8.5

9 7.6

8

5.2%5.2% 4.5%

6.8 7

3.8% 6

3.0%

5

2.0%

4

Source: Company reports, Bernstein estimates

7.0 6.5 6.1

5.8 5.3

5.0 5.1

20 03 20 04 20 05 20 06 20 07 20 0 20 8 09 20 E 10 20 E 11 20 E 12 20 E 13 E

4.0%

20 03 20 04 20 05 20 06 20 07 20 0 20 8 09 20 E 10 20 E 11 20 E 12 20 E 13 E

U.S. Multi-Industry

5.0%

Net debt / equity

10

Source: Company reports, Bernstein estimates

On an ROA basis, our forecast is more in-line with history. We believe that GE Capital should be able to earn close to the historic average ROA of 1.4% in the years post 2012. Management said that new originations were made at 3.3% ROI in 3Q09, citing an attractive underwriting environment. Should the attractive pricing environment continue, there is potential for even higher ROA as the loan book rolls over approximately the next three years. Our ROA forecasts are shown in Exhibit 19 and Exhibit 20.

15

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 19 Our return on segment assets forecast is consistent with the historical average

GECS: Return on segment assets, annual 2.5%

2.3% 2.3% 2.0%

2.0% 1.5%

1997-2008 avg: 1.64%

2.1%

1.8%

1.8% 1.3%

1.5% 1.4% 1.4% 1.4%

1.5%

1.3% 1.0%

1.0%

0.8%

0.5%

0.3% 0.3%

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

0.0%

Source: Company reports, Bernstein estimates

Exhibit 20 Our total ROA forecast is consistent with the historical average

GECS: Total ROA, annual 2.5% 2.0%

1.5%

1997-2008 avg: 1.45%

1.8%

2.0% 1.3%

1.5%

1.5% 1.4% 1.4% 1.4%

1.4%

1.5%

1.5% 1.3%

1.2% 1.0%

1.0% 0.7% 0.5%

0.2% 0.2%

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

U.S. Multi-Industry

0.0%

Source: Company reports, Bernstein estimates

The large jump in GE Capital earnings we forecast for 2011 is largely due to tailwinds from lower provision expense. We forecast provision expense to peak at $10.6B in 2009 (2.9% of receivables), then fall to $8.9B in 2010 (2.7% of receivables), and then fall in 2011 to $6.8B (2.3% of receivables). See Exhibit 21 for our provision expense forecast. We model provision expense to be anticipatory of net charge-offs (NCOs) by about one year, hence we model provisions peaking in 2009 while NCOs peak in 2010. However, we anticipate greater regulatory scrutiny of reserve release practices and hence keep reserve rates higher than NTM NCOs would imply alone. See Exhibit 23 for a comparison of provision and NCOs forecast.

16

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 21 We believe provision expense will peak in 2009

Provisions expense 12

10.6

10

8.9 7.5

$B

8

6.8

6 4 1.4

2

1.7

1.6

2.0

2.5

3.1

3.8

3.9

4.4 3.2

3.6

3.1

2.8

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

-

Source: Company reports, Bernstein estimates

Exhibit 22 We model GECS' reserve rate to gradually decline from 2009 highs

LLR as % of receivables 2.5% 2.0%

2.1%

2.0% 1.6% 1.6%

1.8%

1.7% 1.7% 1.7% 1.7% 1.5%

1.5%

1.4%

1.4%

1.6% 1.6% 1.6%

1.2% 1.1%

1.0% 0.5%

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

19 98

19 97

U.S. Multi-Industry

0.0%

Source: Company reports, Bernstein estimates Note: Pre-2005 LLR reserves are adjusted to reflect change in write-off policy for Consumer Finance in 2004

17

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 23 We forecast provisions peaking ahead of NCOs, but remaining well ahead of NCOs through 2011

Provisions expense vs Next 12m net charge-offs 12

10.6

10

8.9 7.5 7.6

8 $B

9.8 7.4

6.8

5.4

6 4

3.1

3.7

4.4

3.8

3.6 2.7

2.8 2.7

2012E

2013E

2 2006

2007

2008 Provisions

2009E

2010E

2011E

NTM Net charge-offs

Source: Company reports, Bernstein estimates

The long-term average NCO rate for GE Capital is 1.3%, and we model the company reaching that level again by 2013, at 1.1%. This is not due to a more optimistic view of credit losses down the road, but rather it is primarily due to the mix shift we anticipate for GE Capital, as the company shrinks its high loss-rate Consumer loan book faster than other parts of the business. See Exhibit 24 for a comparison of provision rate and NCO rate forecasts.

Provision rate vs NTM NCO rate 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5%

NTM NCO rate

20 13 E

20 11 E 20 12 E

20 09 E 20 10 E

20 08

20 07

20 06

20 05

20 04

20 03

20 02

20 01

20 00

19 99

0.0% 19 98

% of avg gross financing receivables

U.S. Multi-Industry

Exhibit 24 Provision and NCO rates track closely over time, with provisions leading by about 1 year

Provision rate

Source: Company reports, Bernstein estimates

For the Commercial Lending and Leasing (CLL) segment at GE Capital, we forecast peak NCOs of 1.85% in 2010, up from 0.70% in 2008 and 0.95% in 2009. Consistent with history and CLL's lending and portfolio strategy, we expect CLL losses to fall well below the U.S. bank average for Commercial and Industrial (C&I) loans, which our Banks team forecasts will reach peak NCOs of 3.81% in 2010. This is due to CLL's relatively high exposure to senior secured tranches, willingness to pursue work-outs in favor

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

of distressed selling, and focus on higher quality credit. 99.9% of GE Capital's CLL portfolio consists of senior secured positions, compared with ~60% in the global commercial lending market. See Exhibit 25 for a comparison of CLL and C&I loss forecasts. Exhibit 25 We expect CLL NCOs to peak in 2010 but at a much lower level than our Bank team forecasts for U.S. C&I loans

4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

Last updated by Bernstein Bank Team, 9/11/09 GE CLL is 99.9% senior secured, vs. ~60% for the global commercial lending market

1998

1999

2000

2001

2002

2003

2004

2005

GE CLL

2006

2007

2008 2009E 2010E 2011E 2012E

Bank C&I

Source: Company reports, FDIC, Bernstein Bank Team, Bernstein estimates

U.S. Multi-Industry

For GE's Commercial Real Estate debt (CRE) segment, we forecast peak NCOs of 2.57% in 2011, up from 0.03% in 2008, 0.72% in 2009, and 2.06% in 2010. NCOs for CRE (and the industry as a whole) are coming off of historic and unsustainable lows enabled by real estate pricing bubbles around the world. Historically, GE CRE has had significantly lower nonperforming loans, delinquencies and NCOs than the U.S. bank CRE in general. This was due to GE's smaller relative exposure to riskier properties such as resorts, single family residential developments, construction projects, high yield, malls, and 2nd mortgages. Construction and development loans make up just 1.5% of GE CRE's portfolio, vs. 32% for U.S. banks. That said, we have some concerns about recent trends in nonearning assets, with nonearnings as a % of receivables rising from 1.2% in 1Q09 to 2.9% in 3Q09. We model GE CRE NCOs to follow a similar path as the U.S. banks CRE loss forecast from the Bernstein Banks team, with slightly lower loss rates. See Exhibit 26.

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 26 We expect GE CRE NCOs to peak in 2011 at a slightly lower level than our Bank team forecasts for U.S. CRE loans

3.5%

Last updated by Bernstein Bank Team, 9/11/09

3.0% 2.5% 2.0%

GE CRE has 1.5% exposure to construction and development, vs. 32% for U.S. banks

1.5% 1.0% 0.5% 0.0% 2005

2006

2007

2008 GE CRE

2009E

2010E

2011E

2012E

Bank CRE

Source: Company reports, FDIC, Bernstein Bank Team, Bernstein estimates

For GE's Consumer U.S. Installment & Revolving sub-segment, which largely consists of U.S. private-label credit card debt and personal loans, we forecast peak NCOs of 13.0% in 2010, up from 6.8% in 2008 and 10.9% in 2009. We expect NCOs to track slightly higher than the U.S. bank average for credit card loans due to the potential for distressed consumers to be more likely to default on their private-label store cards rather than their general purpose cards. See Exhibit 27 for a comparison of GE's NCOs with the Bernstein U.S. Bank team's forecast for credit card losses. Exhibit 27 We expect GE U.S. installment & revolving NCOs to peak in 2010, but at a slightly higher level than our Bank team forecasts for U.S. credit card loans

14.0% 12.0% 10.0% 8.0%

U.S. Multi-Industry

6.0% Last updated by Bernstein Bank Team, 9/11/09

4.0% 2.0% 0.0% 2005

2006

2007

2008

GE U.S. install & revolve

2009E

2010E

2011E

2012E

Bank Credit Card

Source: Company reports, FDIC, Bernstein Bank Team, Bernstein estimates

20

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 28 The gap between the nonearning receivables rate and total NCO rates widened in 3Q09

NCO rate and Nonearning receivables rate (% of receivables) 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0%

3.58%

3.88%

2.79%

1.41%

1.37%

1.42%

1.13%

1.10%

1.02%

2Q07

3Q07

4Q07

Nonearning receivables rate

1.47%

1.53%

1.80%

1.25%

1.08%

1.14%

1Q08

2Q08

3Q08

2.12%

1.68%

1.76%

4Q08

1Q09

2.11%

2.13%

2Q09

3Q09

2.42%

4Q09E

Total NCO rate

Source: Company reports, FDIC, Bernstein Bank Team, Bernstein estimates

In terms of other expense control efforts, GE Capital has been fairly successful in lowering their operating and administrative costs as total revenue has fallen over the last 2 years. Operating and admin expense has fallen by ~30% since mid-2008 and has stayed at about 26% of sales consistently over time, except for an increase to 29% in 3Q09. We forecast GE continuing to maintain the mid-20% cost to sales ratio going forward. We forecast operating and admin expense of $13.1B in 2012, or 26.7% of sales, which compares with $18.8B in 2008, or 26.3% of sales. See Exhibit 29 for a recent history of operating and admin expense. Exhibit 29 GE Capital has reduced its operating and admin expense by ~30% since mid-2008, keeping pace with revenue declines

Operating & admin expense has come down with revenue

Operating & admin exp ($B)

U.S. Multi-Industry

6

28%

28% 26%

26%

26%

26%

26%

29% 27%

26%

26%

23%

5

25% 20%

4

15%

3 2

30%

4.5

4.8

4.7

4.5

4.7

4.9

4.7

4.5

3.9

3.5

3.7

3.4

10% 5%

1

Operating & admin exp (% rev)

35%

7

0%

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09E

Source: Company reports, Bernstein estimates

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November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Other notes on GE Capital: In 3Q09, GE amended its income maintenance agreement with GE Capital to strengthen the bond between the parent and subsidiary by extending the notice period for termination from three to five years and requiring any future potentially adverse (for GE Capital) amendments to require the consent of GE Capital debt holders. The income maintenance agreement calls for GE the parent to make good on any shortfall GE Capital should have regarding maintaining a 1.1 to 1 ratio of earnings to fixed charges. Roughly, the ratio consists of: (GE Capital pre-tax earnings + interest expense) / interest expense. We estimate the fixed charge ratio will be 0.9 to 1 in 2009, falling short of the minimum by about $3.6B. GE the parent made a $9.5B capital contribution in to GECS in 1Q09, which more than covers the $3.6B estimated short-fall for the year. In 2010, we estimate the fixed charge ratio will be 1.03 to 1, falling short of the minimum by about $1.1B. We model GE the parent making another capital contribution to GECS of $1.3B in 1Q11 to cover this estimated short-fall. The company guided to capital contributions ranging from $2B in the "fed base case" to $7B in the "fed adverse case" back in July 2009. In 1Q10, GE Capital will have about $37B in off-balance sheet assets brought back onto the books. We estimate that the hit to retained earnings will be approximately $2B in the quarter, which we include in our model.

4) An infrastructure rebound in 2011/12, fueled by an industrial recovery and increasing emerging markets exposure, should drive 6-7% revenue and 8-10% earnings growth.

Before diving into some of the key industrial segments, recall that no business segment accounts for more than 14% of GE's revenues (Exhibit 30). Of course, within each of these reporting segments, there are numerous, very different P&Ls serving very different buyers with different technologies, economics and competitive dynamics.

U.S. Multi-Industry

GE serves end markets across many different industries, including energy, finance, health care, media and entertainment, construction, and industrial manufacturing (Exhibit 31). Of these end markets, energy and process and commercial and consumer lending contribute the most revenue. It is important to note that each these buckets cover many underlying end markets; for instance, "Energy & Process" spans oil and gas, power, utilities, refining, and other process industries.

22

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 30 No business segment accounts for more than 14% of GE's revenues

GE Business Segments Energy FS 2% GECAS 3%Real

Corp 3%

Estate 4%

Tech Infra 25%

Healthcare 10% Aviation 11%

Money 13%

Industrial Mfg 5%

Energy 15%

Other Constr & RE 7%

C&I 6%

NBCU 9%

Oil & Gas 5% 2008 Revenue = $183B Source: Company reports and Bernstein analysis

Energy Infra 18%

Govt & Military Aero 4%

Other (Transport Water) 5%

GE End Markets

Energy & Process 22% Civil Aviation 9%

CLL 14% Capital Finance 38%

Transport Enterprise Solutions 3% 3%

Exhibit 31 GE sells into our most highly diversified set of end markets

Media 9%

Coml Lending 15% Health care 10%

Consum Lending 14%

2008 Revenue = $183B

Source: Company reports and Bernstein analysis

U.S. Multi-Industry

While management is shrinking the business (Exhibit 32), capital still represents at least one-third of the business in 2009. Exhibit 33 breaks out the first-level reporting segments within GE's "industrial" businesses. The infrastructure businesses are the largest contributors, particularly Tech.

23

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 32 We expect Capital to contribute about 32% of overall GE sales and 15% of profit in 2009

Exhibit 33 The infrastructure businesses will deliver most of the sales, growth and profitability outside of capital

GE Industrial vs. Capital Mix

GE Industrial Segment Mix

140%

100%

120% 100%

Percentage of Total

15%

1% 32%

80% 60%

108%

40%

67%

20%

80%

15%

60%

34%

2%

21%

18%

4% 9% 4%

26%

40%

35%

34%

41%

44%

46%

45%

46%

Sales ('08)

Growth ('04-'08)

Profit ('08)

Assets ('08)

Capex ('08)

26%

40% 20%

0%

0% 10%

-23% -20%

0%

-40% Sales ('09)

Profit ('09)

GE Industrial

GE Capital

Corporate

Source: Company reports and Bernstein analysis

Technology Infrastructure

Energy Infrastructure

NBCU

Consumer & Industrial

Source: Company reports and Bernstein analysis

We believe that focus is continuing to shift to GE's "industrial" businesses, in light of reduced uncertainty at other financial institutions, other industrials' earnings beats (despite top line and order weakness) and the discussion of more positive leading economic indicators. We expect to see solid earnings growth in the industrial businesses, increasing from $8.8B in 2010 to $11.2B by 2012 (see Exhibit 34). Exhibit 34 We forecast GE's Industrial businesses to return to 2008 earnings by 2012

$B

U.S. Multi-Industry

GE Industrial earnings from continuing ops, forecast 14 12 10 8 6 4 2 -

8.4

2005

9.1

2006

10.0

2007

10.2

2008

11.2 9.1

8.8

2009E

2010E

12.0

9.9

2011E

2012E

2013E

Source: Company filings, Bernstein analysis and estimates

How do we expect to get to these earnings figures? Our industrial growth in EPS from $0.82 in 2010 to $1.09 by 2012 is driven by 1) 6.7% revenue CAGR; 2) 130 bp of segment margin expansion after corporate expenses (restructuring, pension); and 3) stable industrials tax rate in the 25% range. Despite the severe recession, secular end-market growth trends will provide substantial tailwind to GE's businesses over coming years. This ranges from longer term urbanization, emerging market growth and

24

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

energy demand to increasing energy and environmental regulation, aging populations and the proliferation of media content and distribution (Exhibit 35). Exhibit 35 GE has bought into long term secular growth trends across its portfolio with near term pressures. Aviation & GECAS Emerging market growth / natl airlines/OEMs Big OEM backlog (& urbanization/infrastructure)

Transportation Emerging market growth (global trade secular trend)

Enterprise Solutions Emerging mkts, urbanization (non-res construction cycles)

Pass growth, flight hours pressured

Aging fleets

Regulation & codes

Parking aging fleets; capacity reduction

Fuel costs, emissions focus

Global safety & security concerns

Airline bankruptcies, fuel costs & flight efficiency

Productivity, reliability

Energy demand, efficiency, green

Aircraft intelligence, systems/solutions, noise

Rail intelligence

Productivity

Entering late part of cycle (new platforms)

Truck headwinds (fuel, congest, labor)

Defense budget pressures/growth (next gen) Aftermarket outsourcing; Financing challenges Energy & Water, O&G, Energy Finl Svcs Energy demand & emerging market growth

Healthcare Aging population

NBCU Content, distribution proliferation

Environmental impact (emissions, carbon taxes, fuel efficiency)

Emerging market growth (& rising incomes / quality of life)

Broadcast decline, cable growth (DVRs, on demand etc.)

Long term nuclear renaissance

Prevalence of disease

Film extension beyond box office

Renewable targets & investments (wind, solar, biomass)

Increasing cost of healthcare Theme park licensing (pricing transparency, quality of care)

Water scarcity

Regulation (efficacy / efficiency)

Intl / Digital / channel growth

Aging infrastructure (gen, transmission, dist)

Reimbursement pressures

Targeted advertising

O&G harder to find, refine leading to more drilling, more pipelines, more refineries and tech intensive

Non-invasive technologies, information sharing, preventatives

Cost/productivity

Consumer & Industrial Deep and broad housing downturn

Commercial Fin / Real Estate Credit crunch & capital mkt volatility

GE Money

Industrial investment cycling down

Lack of asset liquidity

Cost / energy efficiency focus

Increasing spreads

Shift to LED lighting

Industry consolidation

Globalization - sourcing, localization and emerging market / infrastructure growth Industry consolidation

Increasing regulation Global construction cycle down Industrials also reducing investment

U.S. Multi-Industry

Financing volatility

Deep and broad housing downturn (and auto / card pressures)

Source: Company and industry reports, Bernstein research

Infrastructure Related Revenue Growth

In general, we expect Technology and Energy Infrastructure revenues and segment profits will bottom in 2010 before rebounding strongly in 2011 and 2012. We think Aviation, Healthcare and Energy matter the most on the rebound and like GE's presence in emerging markets such as China and India. One indicator of how revenue will fare are trends in orders. Total Infrastructure orders were reported down 15% in 3Q09 (vs. down 25% in 2Q09) and down 17% YTD. Equipment orders declined a steep 32%, although the decline was slightly less bad than the 42% drop in 2Q09. In addition, service orders, which drive most of the company's earnings, continued to increase in all 3 quarters (with 3% growth in 3Q09). The increase in the CSA backlog drove a total backlog increase of $4B to $174B in 3Q09. Management's

25

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

disclosure that equipment backlog converts to revenue over longer time periods (usually 2/3 over next year) and current order level trends suggest equipment declines of 10-15%. See Exhibit 36 and Exhibit 37 for more detail on historic equipment and services order rates for GE. Exhibit 36 Equipment orders plummeted in recent quarters but improved slightly in 3Q09

Total GE Equipment Orders Growth 80%

67% 54%

60% 33%

40%

39%

35%

33%

16%

20%

11%

4%

5%

0% -2%

-20%

-11%

-40%

-21% -42%

-60% 1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

-32%

2Q09

3Q09

2%

3%

2Q09

3Q09

Source: Company filings, Bernstein estimates

Exhibit 37 Services orders are relatively low but still positive

Total GE Services Orders Growth 25% 20%

19%

18%

20%

16% 13%

15%

10%

11%

11%

10%

7% 4%

5%

5%

5% 2%

U.S. Multi-Industry

0% 1Q06

2Q06

3Q06

4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

Source: Company filings, Bernstein estimates

We forecast industrial revenues shrinking 8% in 2009, down another 1% in 2010, and then growing 7% in 2011 and 6% in 2012. In 2011-12, continued service strength, macro-economic stabilization/recovery and benefits from global fiscal stimulus programs should partially offset weakness driven by current order trends. See Exhibit 38-Exhibit 39 for more detailed industrial revenue and growth forecasts.

26

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 38 We expect the industrial businesses revenue to have a ~4% CAGR from 2009 through 2012

Industrial Revenue Forecast 140 120

$B

100

9.8 15.2

10.2 15.8

10.9 16.6

11.5 17.3

11.9 17.9

38.6

34.4

36.6

38.8

41.2

36.2

46.3

42.8

42.2

45.8

49.4

52.6

2008

2009E

2010E

2011E

2012E

2013E

11.7 17.0

80 60 40 20 -

Technology Infrastructure

Energy Infrastructure

NBCU

C&I

Source: Company filings, Bernstein analysis and estimates

Exhibit 39 We forecast 2011 to be the rebound year for revenue growth for most of GE's businesses Industrial Revenue Growth Technology Infrastructure: Aviation Enterprise Solutions Healthcare Transportation Energy Infrastructure NBCU C&I Total Industrial

2007 13.6% 29.2% 12.9% 2.6% 8.8% 21.7% -4.8% -4.1% 10.1%

2008 8.2% 14.4% 5.6% 2.3% 10.9% 25.6% 10.1% -7.3% 11.8%

2009E -7.7% -1.9% -20.9% -9.2% -12.1% -6.2% -10.2% -16.7% -8.5%

2010E -1.3% -0.5% -5.9% 0.5% -6.8% -4.8% 3.7% 4.3% -1.2%

2011E 8.5% 10.0% 7.0% 6.2% 12.0% 6.1% 5.0% 7.0% 7.0%

2012E 7.7% 8.0% 8.0% 7.0% 9.0% 6.1% 4.0% 5.0% 6.4%

2013E 6.5% 5.3% 6.0% 8.0% 7.0% 6.1% 3.5% 3.5% 5.6%

Source: Company filings, Bernstein analysis and estimates

U.S. Multi-Industry

What is going to drive this high revenue growth? As industrial production picks up, the excess capacity that we've seen throughout 2009 should clear. In addition, GE is increasing its exposure to growth in emerging markets, which are particularly levered to infrastructure investment. The combination of these trends should benefit revenue growth at GE relatively more than at some of the other companies in our coverage. A look at near term trends is helpful to see the sequential pickup across a number of segments in the U.S. (Exhibit 40).

27

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 40 U.S. industrial end market indicators have shown improvement in July and August

Industrial Segment

Industrial production indicator

Apr

May

YoY growth Jun Jul

Aug

Sep

Healthcare

Medical equipment & supplies

3.7%

3.8%

3.0%

2.0%

2.2%

Energy

Engines, turbines, power trans equip

Aviation

Aerospace products & parts

Transportation

Railroad eqip, ships & boats

C&I

Household appliances

Industrial Segment

Industrial production indicator

Apr

May

MoM growth Jun Jul

Aug

Sep

Healthcare

Medical equipment & supplies

1.4%

0.5%

-1.1%

0.5%

2.6%

-0.5%

Energy

Engines, turbines, power trans equip

-1.4%

-3.2%

-6.2%

-1.0%

1.8%

-1.9%

Aviation

Aerospace products & parts

-1.7%

-1.8%

-0.3%

1.7%

-0.3%

2.0%

Transportation

Railroad eqip, ships & boats

-1.4%

1.0%

2.1%

1.4%

1.6%

-1.0%

C&I

Household appliances

7.6%

-0.3%

-8.7%

1.4%

2.9%

1.2%

2.6%

-30.0% -31.5% -33.1% -29.5% -32.8% -32.9% -3.5%

-4.7%

-6.7%

-4.3%

-4.2% 21.0%

-21.8% -19.9% -18.7% -13.3% -12.0%

-9.9%

-8.8% -10.7% -18.5% -16.4% -10.5%

-1.9%

Source: Federal Reserve, Global Insight, Bernstein analysis

Industrial production recovery

U.S. Multi-Industry

We believe that much of the rebound in the infrastructure businesses will be related to a recovery in industrial production, and the resulting decline in excess capacity. As we have demonstrated in past research, the decline in industrial production in the current recession has been worse than in any recession since the 1950s. In addition, it has taken longer to bottom than in any of the recessions shown in Exhibit 41. However, we have talked about the bottom forming and indeed now see some improvement.

28

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 41 Industrial Production, normalized to the first month of the recession

IPI Normalized to First Month of Recession

1.10 1960 1957 1953

IPI in previous recessions 1.05

1990 1969

1.00

2001 0.95

1981 1973

0.90 2008 0.85

Latest data, Sep-09 0.80 1

2

3

4

5

6

7

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 Months from Recession Beginning

Source: Global Insight and Bernstein analysis

The seizure in industrial production drove a sharp decline in industrial capacity utilization, with the June reading of 68.3 being the lowest in over 40 years (Exhibit 42). The current reading has ticked up to 70.5, and we expect it to increase as industrial production returns. Exhibit 42 Industrial Capacity Utilization

Total Industrial Capacity Utilization

Capacity Utilization (%)

90 85 80 75 70 70

Recession

Jan-09

Jan-07

Jan-05

Jan-03

Jan-01

Jan-99

Jan-97

Jan-95

Jan-93

Jan-91

Jan-89

Jan-87

Jan-85

Jan-83

Jan-81

Jan-79

Jan-77

Jan-75

Jan-73

Jan-71

Jan-69

65

Jan-67

U.S. Multi-Industry

95

Capacity Utilization

Source: Global Insight and Bernstein analysis

29

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Infrastructure-fueled growth Among all of the companies in our coverage, GE has the most exposure to infrastructure, at 26% of industrials revenue and 27% of industrials profit (Exhibit 43). Approximately 80% of energy and water, 60% of oil & gas, 15% of transportation, and 15% of enterprise solutions are exposed to infrastructure. In addition, another 5-10% of GECAS and EFS revenues are driven by infrastructure. We believe GE's business mix will become even more weighted to infrastructure and especially to energy over the next 4-5 years. Exhibit 43 GE has the highest exposure to infrastructure in our coverage Infrastructure Exposure Across MI Companies

30%

% of 2008 Company Total

25% Avg Profit = 19%

20%

Avg Rev = 17%

15%

10%

5%

0% GE Ind

EMR

TYC

Infrastructure % of Total Revenue

HON

MMM

DHR

Infrastructure % of Profit

U.S. Multi-Industry

Source: Bernstein analysis, Company reports, and management discussions

Generally speaking, businesses with exposure to infrastructure post higher historical growth rates than the other businesses or the company overall. GE's infrastructure growth was above 20% between 2005-2008, compared to ~11% total growth and 8% growth at other businesses. Infrastructure related growth made up >40% of GE's industrial growth in the last three years and while we expect a decline in 2010 and slower growth thereafter, we still expect it to comprise almost half of GE's overall growth through 2013. In 2007, 19 "megacities" had populations greater than 10MM but accounted for only 9% of the planet's urban population. There are 30 "megacities in waiting" between 1M and 5M and 75% of these are in developing countries. Approximately 23% of the world population lives in cities between 1 and 5M. An average of total infrastructure spending across the number of cities with populations greater than 750,000 in Exhibit 44 begins to show the potential growth in place like Brazil, China, Russia and India among others. A quick sensitivity in Exhibit 45 shows the order of magnitude opportunity as more cities receive needed infrastructure in larger developing countries. If the per city spending in these 5 countries (BRIC + Indonesia) and just 10% of the remaining world's cities reached the levels of the US (one of the lower spends for a developed country), then their total spending would double and the world's would increase by 30%. We are not suggesting spending at levels of the UAE or Tokyo, but over time the increase is still dramatic. We estimate that the total global market for infrastructure-related spending is ~$2.3 trillion in 2009.

30

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 44 Infrastructure Construction Spending Per City Across Countries Shows Wide Variation (Constant $ 2000) # Cities with Populations > 750K in 2007

Japan UAE Germany Canada Australia France U.K. South Korea U.S. Singapore Indonesia Brazil China Russia India Other World

Cities W/Popln Country Infra. Spend per city > 750K Con. Spend ($B) ($B) 8 319 39.9 1 11 10.6 4 29 7.2 6 10 1.6 5 32 6.3 7 39 5.6 7 35 4.9 11 57 5.2 54 232 4.3 1 2 2.3 12 27 2.3 24 55 2.3 141 186 1.3 16 18 1.1 59 45 0.8 >300 341 >656 1,436

Source: UN DESA, World Population Database, 2007 Revision, Global Insight and Bernstein Analysis

Exhibit 45 2007 Infrastructure Construction Opportunity Sensitivity at Increased Spending Levels is Significant (constant $ 2000) Sensitivity At Increased Spending Levels

Current @ US Infra Con Spend Per City Spend Brazil 55 65 China 186 381 Russia 18 43 India 45 159 Indonesia 27 32 10% of Other 38 81 Sub-Total 368 761 % Increase 107% Countries 1,068 1,088 Total 1,436 1,850 % Increase 29%

@ UK Spend Per @ German City Spend Per City 130 175 761 1,029 86 117 319 431 65 88 162 219 1,523 2,059 313% 1,088 2,614

459% 1,088 3,151

82%

119%

Source: UN DESA, Global Insight and Bernstein Analysis

U.S. Multi-Industry

We believe that infrastructure investment growth is driven largely by the will and means of governments to invest. This government commitment creates more of a buffer to the volatility of economic cycles. Governments such as those in China are likely to maintain their investments and ride out short term economic cycles, resulting in temporary declines in export manufacturing. It would likely take the expectation of a prolonged global recession over many years to change government policy and reduce the commitment to investment so long as the government has the reserves, tax base and/or debt capacity to fund it. We also point to commodity-led growth and GDP diversification in oil rich countries and infrastructure lifecycle "reinvestment" in mature economies. While most of the growth means new jobs with people needing electricity, water and transportation, some of this growth is well ahead of real demand, as evidenced by investment in places such as Dubai. Even in these cases, governments often respond with more infrastructure investment and continue to spend through recessions (Exhibit 46).

31

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 46 Infrastructure Construction Spending has not been sensitive to recessions in the US, Europe and most of Asia but decreased in Japan in the years following the crisis of the late 90s Asian Crisis

US Recession

US, Japan Recession

Infrastructure Construction Spending (constant $B 2005)

400

Global Recession

Europe Downturn

350 300 250 200 150 100 50

19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 08 20 09 E

0

Japan

U.S.

China

South Korea

U.K.

Germany

Australia

Source: Global Insight and Bernstein Analysis

U.S. Multi-Industry

This has been the case in the current recession, and we expect infrastructure spending to remain robust growing forward. Growth in China in particular should continue to be strong (Exhibit 47). For more detail, please see our piece from August 19, 2009: "Bernstein Industrials: Global Infrastructure Round 2 (When Will We Get Back to the Boom?)"

32

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 47 Infrastructure Construction Spending (constant 2005 billions $) Global Recession Infrastructure Construction Spending (constant $B 2005)

400 350 300 250 200 150 100 50 0 2008

2009E Japan South Korea Australia

2010E

2011E U.S. U.K. Singapore

2012E

2013E

China Germany

Source: Global Insight and Bernstein analysis

Emerging Markets Exposure

U.S. Multi-Industry

GE also has significant exposure to emerging markets, where we expect the rate of growth to continue to be higher than growth in developed areas. GE's exposure to these fast growing areas should increase going forward, both as a function of the higher growth in these areas and intentional positioning of the business to capitalize on growth opportunities. In 2008, emerging regions contributed approximately 28% of GE Industrial revenue. By 2012, we expect that this will increase to ~39% - over one third - of Industrial revenue) (Exhibit 48-Exhibit 49). Despite the global downturn, GE's revenue in China is expected to grow more than 20% in 2009. We expect this growth to accelerate to the 20% to 25% range through 2011 from demand in the health care, water, energy, and aviation end markets. Revenue in India is on track to grow over 12% this year, and we expect that to increase to 15% in 2010 and approximately 20% in 2011. This region should also benefit from health care, locomotive, aviation, and energy demand, as well as nuclear reactor projects. The revenue base in Eastern Europe is roughly split 44% from industrials, and 56% from GE Capital. We expect the industrials portion to increase ~18% in 2009, whereas the GE Capital portion will decline. We expect overall revenue in this region to decelerate in 2010 and 2012 to the 10% to 12% range. In the Middle East and Africa, revenue is on track to grow 5% to 10% this year, as well for the next 2 years. Finally, revenue in Latin America will be down high single digits this year due to FX dynamics, but should increase to ~10% in 2010 and ~12% in 2011 due to a pick up in oil and gas, as well as energy, health care, and locomotive activity.

33

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 48 In 2008, >25% of GE Industrial's revenue came from emerging regions

Exhibit 49 We expect this to increase to >35% by 2011

GE Industrial Rev from Emerging Regions, 2008

China 4%

GE Industrial Rev from Emerging Regions, 2011E China 7%

India 2% E. Europe 2% Mid East/Africa 9%

India 3% E. Europe 4% Mid East/Africa 11%

Lat Am 6% Other Emerg. Mkts 5%

Other 72%

Other 61%

Lat Am 7% Other Emerg. Mkts 7%

Source: Company reports and interviews, and Bernstein estimates and analysis

Source: Company reports and interviews, and Bernstein estimates and analysis

Focus on Energy Segment Revenue Growth

We think it is helpful to briefly focus on the energy business within Energy Infrastructure.

GE Energy (ex O&G) IGCC 2%

Energy Infra: Energy (ex-O&G)

Env Svcs 2%

35

Gas Engines 4%

19% 18% 17% 16% 15% 14% 13% 12% 11% 10%

30 25 $B

Nuclear 4%

Opt & Control 4%

Energy Services 41% Wind 19%

20 15 10

Gas Turbines 20%

2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E

U.S. Multi-Industry

T&D 4%

Exhibit 51 We forecast declining revenues in 2009 and 10 before recovering in 2011 and growing faster thereafter

Segment Margin

Exhibit 50 At $17B, Healthcare is now less than half diagnostic imaging with clinical systems another 25%

Revenue

Margin

2008 Revenue = $29B Source: Company reports

Source: Company reports and Bernstein analysis

34

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Total energy order rates, including equipment and CSA, bottomed in the 2nd quarter and we forecast them improving over coming quarters based on government stimulus funding and global demand for wind and smart grid investments as well as macro-driven recovery driving increasing needs for power generation and services. Over the much longer term, we think GE stands to benefit from technology programs across nuclear, turbines, renewables and transmission / distribution. In total, GE's key energy program investments (across the larger segment including O&G) have increased from $1.3B in 2006 to $1.9B in 2009 and are expected to reach $2.1B in 2012. Exhibit 52 We estimate Energy order rates to continue to improve after bottoming in 2Q09

Total Energy orders growth 70% 56%

60% 50% 36%

40%

39%

36% 30%

30% 18%

20% 10%

15%

6%

20%

5%

0%

0% -10%

-5%

-20%

-15%

-20%

-30%

-25% -33%

-40%

1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E Source: Company reports, Bernstein estimates

Exhibit 53 We expect Energy sales to bottom in 4Q09, lagging orders by 2 quarters

Total Energy sales growth 50% 35%

U.S. Multi-Industry

40%

29%

30% 20% 10%

38%

24% 15%

21%

16% 9%

5%

3%

0% -1%

-10%

-2% -8%

-11%

-20%

-15% -20%

-30% 1Q07 2Q07 3Q07 4Q07 1Q08 2Q08 3Q08 4Q08 1Q09 2Q09 3Q09 4Q09E 1Q10E 2Q10E 3Q10E 4Q10E

Source: Company reports, Bernstein estimates

35

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 55 GE Energy Equipment

25%

40%

60%

20%

20% 2

R = 84%

10% 0% -10%

50% 40% 2

R = 57%

30% 20% 10%

Sales growth (2 qtr lag)

70%

30%

0%

50%

100%

15% 10% 5% 0% -5% -10%

0%

-20% -50%

Exhibit 56 GE Energy Services

50% Sales growth (2 qtr lag)

Sales growth (2 qtr lag)

Exhibit 54 Total GE Energy

0%

50%

100%

150%

-20%

-15% -10% 0%

10%

20%

30%

Orders growth

Orders growth

Orders growth

2

R = 30%

Source: Company reports, Bernstein analysis

Source: Company reports, Bernstein analysis

Source: Company reports, Bernstein analysis

Note: orders 1Q07 to 1Q09, sales 3Q07 to 3Q09

Note: orders 2Q06 to 3Q07, sales 2Q07 to 3Q08

Note: orders and sales 2Q07 to 3Q09

Exhibit 57 Our regression model forecasts global electrical capacity shipments to be down 21% in 2010 and up 75% in 2011

Total Global Shipments - Gas-related capacity (GW)

U.S. Multi-Industry

19 89 19 90 19 91 19 92 19 93 19 94 19 95 19 96 19 97 19 98 19 99 20 00 20 01 20 02 20 03 20 04 20 05 20 06 20 07 20 0 20 8 09 E 20 10 E 20 11 E 20 12 E 20 13 E

140% 120% 100% 80% 60% 40% 20% 0% -20% -40% -60% -80%

Actual

Predicted

Source: McCoy, Global Insight, Bernstein estimates

36

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 58 Our global electrical shipment model is based on Global Insight forecasts of U.S. electricity sales and Utilities industrial production SUMMARY OUTPUT Regression Statistics Multiple R R Square Adjusted R Square Standard Error Observations

0.61 0.38 0.30 0.30 20.00

ANOVA df Regression Residual Total

SS 2.00 17.00 19.00

Coefficients Intercept Sales of electricity to ultimate consumers Industrial production--Utilities

(0.10) 29.33 (17.32)

0.92 1.52 2.44 Standard Error 0.13 9.61 8.34

MS 0.46 0.09

t Stat (0.77) 3.05 (2.08)

F 5.14

Significance F 0.02

P-value 0.45 0.01 0.05

Lower 95% (0.37) 9.05 (34.91)

Source: McCoy, Global Insight, Bernstein estimates

Focus on Healthcare Segment Growth

While we believe Healthcare is an attractive business long-term and generally defensive during down cycles, GE's exposure is primarily to high-cost equipment, which we believe will continue to be more vulnerable as hospitals cut capital expenditures. In 2009 we expect Healthcare revenue to decline 10%, and down another 2% in 2010 before rebounding in 2011 with >6% growth.

U.S. Multi-Industry

This segment has experienced difficult operational periods in the past and will benefit from improved execution in the future. However, the segment will be operating in a more challenging near term environment wherein hospitals are cutting capital expenditures due to both a weak economic environment and the reduced government reimbursements for procedures. We believe diagnostic imaging is the business at most risk of continued reduced revenues, as these purchases are lower priority for hospital executives in budget planning.

37

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 59 At $17B, Healthcare is now less than half diagnostic imaging with clinical systems another 25%

Exhibit 60 We forecast declining revenues in 2009 and 10 before recovering in 2011 and growing faster thereafter

GE Healthcare

~45% US ~34% EMEA ~18% AP ~3% LA

$B

Diagnostic Imaging 47%

Med Diag 11%

Clinical Systems 25%

2008 Revenue = $17.4B

20%

19

18%

18

16%

17

14%

16

12%

15

10%

14

8%

13

6%

12

4%

11

2%

10

0%

Segment margin

HC IT 10%

20

20 05 20 06 20 07 20 0 20 8 09 E 20 10 E 20 11 E 20 12 E 20 13 E

Life Sciences 7%

GE Healthcare Forecast 24% Americas DI 20% Intl DI OEC 3% DI

Revenue

Margin

Source: Company reports and Bernstein analysis

Source: Company reports

This is a business with seemingly great potential that has been plagued by regulatory, operational and structural issues resulting in many guidance disappointments in recent years. See Exhibit 61 for a summary of recent GE Healthcare guidance vs. actual results.

U.S. Multi-Industry

Exhibit 61 GE Healthcare has missed every guidance target in the two prior years and is likely to miss again in 2009

2007 guidance (Dec '06) 2007 actual

Segment profit growth 15-20% -3%

Sales growth 10% 3%

Margin 20% 18%

2008 guidance (Dec '07) 2008 actual

10% -7%

5-7% 2%

19% 16%

2009 guidance (Dec '08) 2009YTD through Sep

Positive -21%

Source: Company reports

At last month's investor event, management issued what they consider "conservative" guidance for 2009-11 of 3-5% revenue growth, 5-10% operating profit growth and +15% ROTC, implying slower growth in 2010 and accelerating into 2011 and beyond. They indicated their outlook and visibility has improved, reflecting "stronger markets, better portfolio and better cost-structure." Our earnings model shows health care revenues up 2% over the same time frame (down 9% in 2009, up half a percent in 2010 and then up more than 6% in 2011).

38

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Real concerns around diagnostic imaging reimbursement and hospital capex trends persist. Recent comments from industry players suggest hospital spending will continue to lag signs of broader economic recovery. − "Hospitals [are] limiting capital spending and slowing adoption of new technology" – Bruce Barett, CEO of Somanetics, 9/17/09 − "Capital spending for big-ticket durable equipment, from beds to MRI's, has not thawed and probably will not for at least another year and a half" – Chris Begley, CEO of Hospira, 9/17/09 − "The economy has to recover for a while for philanthropy and investments to recover" – Tim Birkenstock, CFO of Children's Hospital of Wisconsin, 9/21/09 GE's overweight exposure to imaging technology has meant that it has lagged healthcare capital equipment competitors, Philips and Siemens, in terms of sales growth (see Exhibit 62) in recent quarters. One estimate of the size of the imaging equipment market in the U.S. puts it at $4.6B in 2009, or down 28% since 2006. Exhibit 62 GE Healthcare sales growth has lagged competitors in recent quarters due to higher exposure to imaging equip

Sales YoY growth

Sales growth: GE Healthcare, Philips Healthcare, Siemens Healthcare 35% 30% 25% 20% 15% 10% 5% 0% -5% -10% -15%

28.6% 18.1% 13.9% 9.5%

10.7%

9.6%

3.2%

7.0% 4.0% 0.8%

N/A

-3.4% -8.8% 3Q08

4Q08 GE Healthcare

1Q09 Philips Healthcare

-11.7% 2Q09

-9.3% 3Q09

Siemens Healthcare

U.S. Multi-Industry

Source: Capital IQ, Company reports

Growth is expected to be driven by 1) new products in core segments (especially lower price points); 2) global expansion, - China, India, etc. with localized investment; 3) service/solution investments (EMR, asset mgmt etc.); 4) adjacent segment investments (life sciences etc.); 5) operational excellence (base cost down 8% versus prior year, 7% workforce restructured, 4% deflation, CFOA 1.8x NI) Equipment orders have been down for the last 4 quarters and services orders down for the last 3. More than one member of the management team indicated that the pace of de-stocking appeared to be slowing and they anticipated positive order growth in the coming quarters, for example from academic institutions. We expect this negative trend to continue, as hospitals' appetite for equipment purchases continues to weaken. Secondly, negative equipment order rates did not start until 4Q08, so the fourth quarter could still be a difficult comp for new orders. The equipment backlog was $3.4B as of Q3, and hasn't changed much. See Exhibit 63 for new order growth rate trends.

39

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 63 Equipment and services orders growth

Healthcare Equipment and Services Orders, YoY 13%

15% 8%

10%

8%

9%

8%

5% 1% 0% -1%

-1%

-2%

-5%

-3%

-6% -10% -11% -15%

-13% -15%

-20% 1Q08

2Q08

3Q08

4Q08 Equipment

1Q09

2Q09

3Q09

Services

Source: Company reports

Overall pricing has been negative in three of the last four quarters and we expect that to continue in light of global competition, excess equipment capacity and reimbursement pressure. We do expect some margin relief not just from cost reductions but from services growing faster than equipment.

U.S. Multi-Industry

Management indicated more tailwinds than headwinds coming from healthcare reforms globally. Despite acknowledging increasing equipment utilization mandates being discussed, they expect volume to increase both in the U.S. and globally as a result of increased access and number of procedures. Other tailwinds cited include stimulus dollars, hospital productivity and outsourcing needs, IT standard setting and adoption, and research equipment support. The headwinds mentioned include tax on equipment (although they discussed mitigating factors), lower reimbursement rates in life sciences and delayed drug development. The combination of an aging global population and increasing life expectancy will demand much of the healthcare system in the future. This benefits GE's Healthcare business, as the influx in demand necessitates advanced technologies and support systems (Exhibit 64). Another positive is the historical tendency for healthcare expenditures to behave defensively during periods of low GDP growth (Exhibit 65).

40

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 64 Global aging and increased life expectancy requiring more care are two of the key secular trends

Exhibit 65 Health expenditures in aggregate tend to be more resilient to GDP downturns U.S. Health Expenditures 18%

16

70

16%

14

60

40

8

30

6 4

20

2

10

0

0

% over 60

Life expectancy

Source: United Nations Population Database, Medium Variant

12% 10% 8% 6% 4% 2%

GDP Growth

0%

19 63 19 68 19 73 19 78 19 83 19 88 19 93 19 98 20 0 20 3 08 20 E 13 E

50

10

National Health Expenditure Growth

14% YOY % Growth

12

Life Expectancy at Birth

80

19 50 19 60 19 70 19 80 19 90 20 00 20 10 20 20 20 30

% of World Popn 60 and Over

Aging World Population 18

Source: CMS, Global Insight, Bernstein analysis

U.S. Multi-Industry

Long-term, U.S. health care expenditures are expected to stabilize at lower rates than historically. There are several secular trends providing tailwinds for the sector, however. Specific diseases, such as obesity and diabetes, are becoming both more prevalent and more resistant to treatment, necessitating more advanced treatment. Rising middle classes in developing regions such as China are driving demand for better health care, and heightened regulatory scrutiny and preventative programs call for evolving treatment programs and patient care. We do believe that the tax impact on medical products as shown in the senate finance bill is a negative, but limited. U.S. healthcare overhaul legislation includes cuts in Medicare reimbursement for diagnostic imaging. Approximately 60%, or $10B, of GE Healthcare consists of imaging-related products and services. GE is reportedly in active negotiation with legislators in lobbying for a minimally harmful outcome. So far, proposals look to be a positive for healthcare IT, a negative for imaging and fairly neutral for diagnostics. Proposals include: 1) reimburse first scan at full rate, 50% for subsequent scans1, 2) Excise Tax on medical device industry based on market shares, 3) $19B incentive payments for adoption of healthcare IT, 4) 11-19% payment reductions impacting radiology, radiation therapy, cardiology, 5) CMS imaging use rate change from 50% to 90% - impacts MR, CT, PET and others. GE Healthcare also faces the prospect of an excise tax proposed in the health care bill. The tax would seek to raise $4B in total per year from medical device manufacturers with sales >$500M annually. The potential impact on GE's earnings is not yet clear (it will depend on a determination of GE's market share), but we estimate could be about $120M in 2010, or about a $0.01 hit to EPS. See Exhibit 66 for details on our estimate of the tax impact on GE.

1

Contiguous Body Parts Imaging technical fee reduction

41

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 66 Estimate of earnings impact of proposed $4B medical device tax GE Healthcare 2010E total sales ($M) % of sales medical devices 2010E medical device sales ($M) % of sales equipment GE Healthcare 2010E medical device equipment sales ($M) % of sales in U.S. GE Healthcare 2010E medical device equip U.S. sales ($M) Total U.S. medical device market size ($M) GE Healthcare market share implied Proposed tax ($M) Implied tax per year ($M) GE shares, 2010E (M) GE EPS impact, 2010E

15,411 83% 12,791 60% 7,675 45% 3,454 114,000 3.0% 4,000 121 10,654 (0.01)

<< Excludes Healthcare IT and Life Sciences (17%)

<< Estimate of Class II and III medical device market at about 80% of $143B

Source: Bernstein Medical Devices team, Company reports, Bernstein estimates

While we accept that US equipment is only 10-15% of GE healthcare operating profit, we are still skeptical of management's dismissal of equipment penetration declines resulting from mandatory utilization increases from 50% to 65% over the next four years. We believe it is likely that GE will benefit from stimulus dollars in 2011 given the ARRA's $19B of spending in healthcare IT and $12.5B in healthcare equipment support. Healthcare-related stimulus spending from the U.S. has potential to drive greater patient throughput and benefit GE through greater service and equipment orders. See Exhibit 67. Exhibit 67 Healthcare-related stimulus spending could potentially help GE Healthcare largely through greater patient throughput American Recovery & Reinvestment Act (ARRA) Key Healthcare Components of Stimulus

U.S. Multi-Industry

Healthcare Components of ARRA Medicaid (State funding) Cobra Healthcare IT National Inst. Of Health Community health centers Comparative Effectiveness Research Prevention and Wellness Veteran's Health Admin

$B 87.0 25.0 19.0 10.0 1.5 1.1 1.0 1.0

Impact for GE? More patient throughput More patient throughput EMR adoption Equipment sales Equipment sales

Equipment sales

Source: Philips Healthcare, Bernstein research

We also think the Healthcare business is being managed differently today. John Dineen took over about two years ago and has applied a more cost and process oriented approach across the business, having reorganized, restructured and driven down operating costs. The former Diagnostic Imaging and Clinical Systems P&Ls have been merged, with widespread and significant organizational changes. We also understand six sigma, lean and other tools are being applied more rigorously across the business along side more targeted investments. While revenues are down 10% year to date and operating profit down 21%, cash flow from operations is up 36%. 7% of the workforce has been restructured to date while they talked about adding 1000+ rural China sales force by 2011 and 500+ in rural India. R&D investments appear more targeted and to leverage GE's scale positions. The company asserts that R&D spending levels have not declined although the mix of R&D investments has shifted to more big

42

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

organic growth bets versus many smaller bets. The equipment debate used to center on technology driven "slice wars" year after year – but this appears to have abated, at least from GE's perspective as they focus more on driving improved customer economics. • Portability – Handheld ultrasound, compact point of care ultrasound, and portable low-cost ECG are products being developed to meet growing demand for access to care in remote regions. GE estimates contribution margin improvements from these new products of 10-12% pts and sizes the opportunity at $1B. • Low cost procedures – 1) A low cost MR machine that provides 1.5 Tesla strength magnets is possible through engineering improvements and low-cost local manufacturing. 2) The MAC 400 portable electrocardiography device with one touch operation is 70% lower cost than tradition ECG and is targeted for the Indian market. 3) Ultrasound fusion combines CT and MR, freeing up CT capacity and lowers cost of biopsy. • More precise diagnostics – Innovation by GE in the area of molecular imaging has led to procedures that allow doctors to diagnose cancers and heart disease earlier than before. GE sees this serving the valuable need for earlier diagnosis that both improves quality of patient life and lowers total treatment cost. • Enable home care – Smart monitoring technology will enable home care, which could reduce patient care costs by 20% and free up crowded hospitals. Financing from GE Capital for GE healthcare equipment customers appears to have been smaller in total and at higher price points over the last year and we would expect this to continue into next year. It appears that GE Healthcare will continue to pursue "small, adjacent M&A" until the parent's balance sheet has the strength to support larger acquisitions. For example, GE's total sales in research instruments and consumables (mostly from acquisition) was $700M in 2008 and the company cites a $7B opportunity in 2010, which we think will imply a more acquisitive approach in a target-rich sector. Focus on Aviation Segment Growth

U.S. Multi-Industry

Aviation is a strong business within Tech Infrastructure, providing aircraft engines and services. The subsegment produces jet engines, systems and equipment, and replacement parts for commercial aircraft, military aircraft, business jets, and marine applications.

43

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 68 Services drive most of Aviation profitability

Exhibit 69 Aviation forecast pauses through the cycle then rebounds

Systems 12%

Coml Engine Services 39%

GE Aviation Forecast

24% 22% 20% 18% 16% 14% 12% 10%

20 05 20 06 20 07 20 0 20 8 09 20 E 10 20 E 11 20 E 12 20 E 13 E

1/2 Civil 1/2 Military

Coml Engines 25%

Military 20%

$B

Other (B&GA, Unison) 4%

25 23 21 19 17 15 13 11 9 7 5

Segment margin

GE Aviation

2008 Revenue = $19.2B

Revenue

Source: Company reports and Bernstein Estimates

Margin

Source: Company reports and Bernstein Estimates

The commercial side of Aviation has strengthened in recent years. As seen in Exhibit 70, between 1996 and 2006, GE and CFM took commercial engine leadership from Pratt & Whitney. We expect this trend to continue, with CFM leading the pack by 2016, followed by GE and then Rolls Royce in a distant third. To provide stable support for the original equipment business, management has made a concerted effort to grow the service base through customized service agreements (CSA). GE projects a CSA backlog of around $80 billion by 2011. Exhibit 70 GE and CFM have taken share leadership from Pratt

Exhibit 71 Management has focused on building its service base

Commercial Engines Installed Base 90

GE Coml Customized Svc Agr't Backlog

80

20

Coverage Increasing from 47% in 2006 by 2011

70 60

15 $B

Commercial Engines (000s)

U.S. Multi-Industry

25

10

50 40 30

5

20 10

0 1996 GE

2006 CFM

Source: ACAS, company reports

EA

2016E PW

RR

IAE

0 2001

2006

2008

2011E

Source: Company reports

44

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

GE and CFM have also taken share from Pratt in terms of engine hours, rather than just the installed base. Defined as the number of flight hours multiplied by the total number of engines, engine hours for GE and CFM were 40 million and 19 million in 2007, respectively, versus 24 million for Pratt. This gives GE and CFM combined about 2.5 times Pratt's engine hours (Exhibit 72). Exhibit 72 GE and CFM have also taken share from Pratt in terms of engine hours

Annual Engine Hours by OEM 45,000,000 CFM

40,000,000

Engine Hours

35,000,000 30,000,000 25,000,000

Pratt & Whitney

20,000,000

GE

15,000,000

Rolls-Royce

10,000,000

Intl. Aero Engines

5,000,000 0 1998

Overall Growth:

1999

2000

2001

2002

2003

0.7%

4.1%

-3.9%

-0.3%

1.3%

2004 9.0%

2005

2006

2007

5.4%

4.3%

10.3%

Source: Airbus, Boeing, Lockheed, McDonnell-Douglas, Bernstein Aerospace and Defense Team

GE has still been sustaining new product spend, citing GEnx, GP7200, ARJ, 787/A380 actuation systems (~$1.1B for R&D spend. They are leveraging existing platforms across multiple applications.

U.S. Multi-Industry

Exhibit 73and Exhibit 74 lay out GE's reckoning of their positioning and delivery/removal performance. In May alone, they described 64 redeployments. In 2009, they indicated expectations for 1,930 commercial engine deliveries across GE, CFM and EA (down 5-8% YOY) and 910 for military (up 22%). Lead time on engines is now 6 months to 1 year.

45

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 73 GE is better positioned given its more recent, fuel efficient aircraft.

Exhibit 74 This is a key reason why GE aircraft are faring better than the market.

GE and CFM % of World Fleet Based on Fleet Fuel Efficiency (PAS, 2009)

World Fleet Deliveries/Removals (1/08-5/09)

Percentage of World Fleet

1500 80% 70% 60% 50% 40% 30% 20% 10% 0%

1000 500 0 -500 -1000 GE and CFM Retirement Candidates

Source: Ascend, GE Aviation

Redeployment Best In Class Candidates

Deliveries

All Other Removals

Source: Ascend, GE Aviation

GECAS mentioned that they are fully placed to 2011 and only have 50 slots left for 2012/2013. They also mentioned funding about $8B in transactions last year vs. planning for $7B this year. Lease rates are off about 15% for newer aircraft and 20% + for older, larger aircraft. Some of the risks going forward are competitors discounting even more sharply as demand stays soft. GECAS believes (and this is supported by many of our interviews) the market is experiencing a demand gap more than a financing gap. 2009 financing is already in place and even in 2010, OEMs have additional financing capacity.

U.S. Multi-Industry

Strong military engine deliveries have bolstered slowing commercial deliveries so far, while services growth has slowed somewhat. A hefty $21B equipment backlog and $55B in CSA backlog have helped sustain Aviation during the recession. International traffic passenger growth (RPKs) through August was down less severely than the previous nine months (see Exhibit 75), a sign that overall passenger traffic is on the mend, according to data from IATA. Total traffic (i.e., including domestic and carriers not included in IATA's database) was likely even better, as many smaller non-U.S. carriers that are not included in the data have had fairly good traffic trends.

46

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 75 International passenger traffic growth is getting less bad in recent months

International Revenue Passenger Kilometers, YoY change 4% 1.9% 2%

1.3%

YoY Change

0% -2%

-1.1%

-1.3% -2.9%

-4%

-2.9%

-3.1% -4.6% -4.6%

-6%

-5.6%

-8%

-7.2%

-10%

-9.3%

-10.1% -12%

-11.1% Jun-08 Jul-08 Aug-08 Sep-08 Oct-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May- Jun-09 Jul-09 Aug-09 09 3Q08

4Q08

1Q09

2Q09

3Q09

Source: IATA, Bernstein analysis

Exhibit 76 GE Aviation sales growth is loosely correlated with international traffic

50%

8%

40%

6%

30%

4%

20%

2%

10%

0%

0%

-2%

-10%

-4%

-20%

correl = 55%

-6%

-30%

RPK growth

ug

09

Ju l/A

2Q

09 1Q

08 4Q

08

08 3Q

2Q

07

08 1Q

4Q

07 3Q

07 2Q

07 1Q

4Q

3Q

2Q

1Q

4Q

06

-50% 06

-10% 06

-40%

06

-8%

GE Aviation sales growth, YoY

10%

05

Int'l RPK growth, YoY

U.S. Multi-Industry

GE Aviation vs. International RPK

GE Aviation growth

Source: IATA, Company reports, Bernstein analysis

47

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Deliveries of commercial engines have had negative growth for three consecutive quarters, while deliveries of military engines has been extremely strong for at least six quarters, helping to offset weakness on the commercial side (see Exhibit 77 and Exhibit 78). Exhibit 77 GE commercial engine deliveries have been weak…

Exhibit 78 … while military deliveries have been very strong

Comm'l engines deliveries, growth 20%

90%

15%

10%

70%

5%

60%

0% -5% -10%

-9%

-15%

78%

80%

11%

YoY growth

YoY growth

15%

Military engines deliveries, growth

-20%

-15%

50%

49%

50% 40% 30% 20%

-14%

67%

16% 10%

10%

-19%

0%

-25%

2Q08

2Q08 3Q08 4Q08 1Q09 2Q09 3Q09E

Source: Company reports, Bernstein analysis

3Q08

4Q08

1Q09

2Q09 3Q09E

Source: Company reports, Bernstein analysis

Aviation services sales has held up relatively well, despite the declines in flight hours worldwide. Growth rates have fallen from the 20%+ levels of 2007, but have largely stayed positive through the recession. Exhibit 79 GE Aviation services sales growth has slowed significantly in recent quarters, but has largely stayed positive

Aviation services sales growth 25%

22%

22% 18%

YoY growth

20%

U.S. Multi-Industry

23%

22%

15%

11%

10% 10%

6% 3%

5%

0% 0% -1%

-2%

-5% 4Q06

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09E

Source: Company reports, Bernstein analysis

48

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Margins and Corporate Expense

We forecast segment margins (before corporate) across industrials to increase ~130 bp from 15.6% in 2008 to 16.9% in 2012, above the peak of 16.6% in 2007. This represents approximately 40 bp in Technology Infrastructure, 180 bp in Energy Infrastructure, 130 bp at NBCU and 260 bp at Consumer & Industrial. See Exhibit 80 for more detailed industrial margin forecasts. Much of our modeled margin expansion is due to base cost reduction from restructuring activities. GE announced "$2B+" in additional restructuring funding (across all of GE) for the 2nd half of 2009 and 2010 with "2 years" payback. Through 3Q09, GE funded about $1.2B of restructuring activities in the industrial businesses, and we expect another $400B in 4Q09. On top of $1B in corporate restructuring, GE spent ~$1.2B in both 2008 and 2007 on the industrial segments (excl. losses on exits, R&D impairment, quality costs). "Base" costs for the whole company were reduced 2% by ~$1B, 60% industrial, to $44B in 2008 and the company is targeting 9% reduction to $40B in 2009. Base costs declined 14% in 2Q09 and 10% in 3Q09. We expect restructuring savings on the order of $1.1B in 2009, and another $1.1B in 2010. After corporate expenses such as restructuring and pension expense, we forecast margins to increase from 13.2% in 2009 to 14.3% by 2012. See Exhibit 81 for more detail on our corporate expense forecast, and Exhibit 82 for our expected principal pension plan expense forecast. Exhibit 80 We expect industrial margins to begin to improve in 2011 Industrial Segment Margin Technology Infrastructure: Aviation Enterprise Solutions Healthcare Transportation Energy Infrastructure NBCU C&I Total Industrial Total Industrial after Corp

2007 18.4% 19.2% 15.6% 18.0% 20.7% 15.7% 20.2% 8.2% 16.6% 14.6%

2008 17.6% 19.1% 14.7% 16.4% 19.2% 15.8% 18.5% 3.1% 15.6% 14.0%

2009E 17.5% 21.2% 11.6% 14.4% 18.3% 17.5% 16.0% 3.7% 16.0% 13.2%

2010E 17.5% 21.0% 11.5% 14.9% 17.7% 17.3% 17.3% 4.4% 16.1% 13.3%

2011E 17.8% 21.2% 11.8% 15.1% 18.0% 17.4% 18.8% 5.2% 16.6% 13.9%

2012E 18.0% 21.3% 12.1% 15.4% 18.2% 17.5% 19.8% 5.7% 16.9% 14.6%

2013E 18.1% 21.2% 12.4% 15.7% 18.4% 17.4% 19.7% 5.8% 16.9% 14.7%

U.S. Multi-Industry

Source: Company filings, Bernstein analysis and estimates

49

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 81 We expect corporate expense to rise in 2009 mainly due to restructuring spend, while pension headwinds increase corporate expense in 2010+

GE Corporate expense, forecast 4.0

includes ~$2B in planned restructuring charges

3.5 3.0 $B

2.5 2.0

3.5

3.6

2009E

2010E

3.4

3.3

3.3

2011E

2012E

2013E

2.7

1.8 1.5

1.5 1.0 0.5 2006

2007

2008

Source: Company filings, Bernstein analysis and estimates

Exhibit 82 We forecast the principal pension plan expense to rise significantly in 2010+

Principal Pension Plan Expense, Forecast 3.0 2.46 2.5

2.17 1.89

2.0 1.28

$B

1.5 0.88

1.0 0.33

0.5

0.76

0.76 0.24

-

U.S. Multi-Industry

(0.5)

-0.12 2004

2005

2006

2007

2008

2009E

2010E

2011E

2012E

2013E

Source: Company filings, Bernstein analysis and estimates

We expect the higher margin Services businesses to help offset the lower margin and declining Equipment business volume. Infrastructure equipment backlog now stands at $47B and CSA backlog at $127B for a total of $174B, exceeding both 2007's $158B and 2008's $172B of backlog (Exhibit 83). The $47B in equipment backlog represents a lower percentage of total percentage than in 2008, indicating positive mix dynamics for margins in 2010.

50

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 83 GE Infrastructure backlog

$ Billion

GE Industrial Backlog 200 180 160 140 120 100 80 60 40 20 -

172 B

171 B

170 B

174 B

121

121

122

127

51

50

48

47

4Q08

1Q09

2Q09

3Q09

equipment total

csa total

Source: Company reports and Bernstein analysis

We forecast that 2/3 of the equipment backlog converts into revenue within the following calendar year and the remaining equipment revenue comes from current "in year" orders. This translates to about ~$31B from backlog and then we estimate another ~$8B in-in year equipment orders for about $39B in equipment revenue, or down roughly 10-12% versus prior year. We estimate services related revenue increases 5% to $38B in 2010. We estimate average segment margins on equipment decline by 100 bp from 2009 to 2010 to ~8% and service margins hold at ~27% which actually drives a 20-30 bp increase in average segment margin to 17.4% due to mix shift. See Exhibit 84 for a detailed walk from 2009E to 2010E equipment and services revenue and margins. Exhibit 84 Although equipment volume declines will hurt equipment margins, product mix shift towards services should actually improve margins in 2010E Revenue and margin walk for Technology and Energy Infrastructure Segments, 2009E to 2010E

U.S. Multi-Industry

2010E equipment revenue and profit $47B -$8B $31B +$8B $39B

'09E equipment backlog 2/3 converts to revenue in '10E '10E revenue from backlog '10E revenue from in-year orders '10E equipment revenue

9.0% '09E equipment margin -1.0% '10E margin degredation 8.0% '10E equipment margin

2010E services revenue and profit $36B 5% $38B

'09E services revenue 10E services revenue growth '10E services revenue

2010E total revenue and profit $77B total equip & svcs revenue $13.4B Total equip & svcs profit 17.4% Total equip & svcs margin

27.0% '10E services margin (no change YoY) $10.3B '10E services profit

$3.1B '10E equipment profit Source: Bernstein estimates

Tax Rate

GE Industrial's tax rate was 22% in the quarter and is approximately 26% year-to-date. The company guided to a full year tax rate in the low to mid-20's, implying a ~16% tax rate in the fourth quarter. We

51

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

expect an Industrials tax rate of 23% in 2009, followed by 25% going forward. This assumes that current political discussions on tax do not dramatically affect the Industrial rate. The Consolidated rate is shaping up to be slightly negative in 2009 thanks to large tax benefits from GECS. We expect that GECS will return to pre-tax profitability in 2010, but will not have positive effective rates until 2011+, when pre-tax earnings become more significant. Once we reach this point, we expect that the consolidated rate will rise to the low 20% range. See Exhibit 85 for our tax rate forecast for GE Industrial and GE Consolidated. See Exhibit 86 for the breakout view of tax expense contribution from Industrials and GECS. Exhibit 85 We expect the GE Consolidated tax rate to rise to the low 20% in 2011 range after two years of very low effective rates

Tax Rate, Forecast 30% 25% 20% 15% 10% 5% 0% -5% -10%

24%

21% 16%

25%

23%

21% 15%

25%

25%

22%

22%

14% 5%

-6% 2006

2007

2008

2009E

GE Industrial

2010E

2011E

2012E

GE Consolidated

Source: Company filings, Bernstein analysis and estimates

Exhibit 86 We forecast GECS to return to having positive tax expense in 2011+

Tax Expense, Forecast, annual 6 5 4 3 $B

U.S. Multi-Industry

2 1 -

2.7

2.6

4.0

2.8 3.4

1.2

1.4

2.9

(2.4)

(2)

Expense

3.1

1.4

(1)

4.2

3.5 0.6

1.1

1.3

2011E

2012E

2013E

(1.3) (3.5)

(3) (4)

Benefit 2005

2006

2007

2008 GECS

2009E

2010E

GE Industrial

Source: Company filings, Bernstein analysis and estimates

52

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

5) We see GE shedding businesses with some $25-30B of revenue over the next 2-3 years and the portfolio changing for the better.

Much of GE's intent with the portfolio is clear - to invest in core and adjacent infrastructure businesses – the challenge is execution. But this becomes more practical in a recovery as buyers and sellers close valuation gaps. What's out on the Industrial side? Most of Consumer & Industrial, Enterprise Solutions and even NBC Universal – producing $28-29B in revenue and $3-4B of segment profit in 2009. What about on the Capital side? GE may divest much of Consumer and selective pieces of the other businesses – or at least reduce originations. We think this means that much of the bet on GE is a bet on the company's ability to re-invest proceeds in enterprises that add value for shareholders. We anticipate increasing dividends and share repurchases of course. But acquisitions will be key. The track record is clearly mixed at best – Enron wind was a great story. Interlogix and Edwards were not. And there are many more examples. Going forward, we have more confidence in GE picking the right core/adjacent strategic properties and integrating them successfully – we point to the recent bid for Areva's Transmission and Distribution business, even if they don't win it. Exhibit 87 summarizes the various pieces of GE's growth since 2001. Exhibit 87 GE Growth since 2001 Time

Acquisitions

Divestitures 2003: GE Medical ($1.3B revenue)

2001: General Electric $126B revenue

2005: Genworth ($10B revenue)

2004: Amersham ($2.5B revenue) 2004-05: Vivendi Universal ($7.1B revenue) 2006: IDX ($0.6B revenue)

+

2005: Insurance Solutions ($6B revenue)

-

2006: Momentive ($2.5B revenue)

2007: Smith Aero ($2.4B revenue)

2007: General Electric $173B revenue

~$50B revenue

FX $4B

2007: GE Plastics ($6.6B revenue)

~$60+ B revenue

Size of GE in 2001

Revenue from acquisitions

Revenue from divestitures

Total organic growth

Key acquisitions

Key divestitures

FX in 2007

U.S. Multi-Industry

Source: Company reports and Bernstein estimates

C&I, Enterprise Solutions, NBCU

In 2008 GE announced plans to spin off C&I, but later decided to hold onto the businesses until acquisition markets improved. GE reportedly put up its Security business (within Enterprise Solutions) for sale in 2009. We view it as likely that GE will sell both the C&I and Enterprise Solutions businesses over the next couple of years. Neither C&I nor Enterprise Solutions were in the 3Q09 earnings presentation, despite a strong quarter from C&I. Further, we expect 2009 to be the year that Vivendi exercises its exit rights with respect to its 20% stake in NBCU, and it seems likely that Comcast and NBCU will then establish a joint venture. We estimate the implied valuation for legacy NBCU to be ~$24B, before the contribution of Comcast's programming assets. Please see our October 13, 2009 piece, "Comcast and NBCU: The Meaning of It All [Conference Call Transcript]" for more detail. To approximate potential deal values for Enterprise Solutions and C&I, we ran a sum-of-the-parts analysis:

53

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

• Enterprise Solutions, a $4.7B business in '08, consists of a collection of businesses focused on technologies for sensing, safety and power systems. 40% of the business is GE Security, 24% is Sensing & Inspection Tech, 22% is GE Fanuc, a JV between GE and Fanuc of Japan that will dissolve by the end of this year (GE is expected to retain the software, services, embedded systems and control systems businesses), and the remaining 15% is GE Digital Energy. For our sum of the parts analysis of Enterprise Solutions, we chose peer companies2 which have significant exposure3 to security, sensing & inspection, GE Fanuc and Digital Energy end markets. These include Honeywell (HON), Tyco (TYC), Rockwell Automation (ROK), Emerson (EMR), and Eaton (ETN). Our valuation of GE Enterprise Solutions is detailed in Exhibit 88. The median price / EBIT of the five peer companies from 2007-12E suggests GE Enterprise Solutions is worth approximately $4.5B, or $0.42/share. • Consumer & Industrial is an $11.5B business offering products for both consumer and industrial applications. Appliances is 53% of the business, Lighting is 21%, and Industrial is 26%. For our sum of the parts analysis of GE C&I, we chose primarily major appliance makers. These include Whirlpool Corp (WHR), Electrolux AB, Black & Decker (BDK), Quingdao Haier Co, and Koninklijke Philips Electronics (PHIA@NA). Our valuation of GE C&I is detailed in Exhibit 89. The median price / EBIT of the five peer companies from 2007-12E suggests C&I is worth approximately $5.4B, or $0.51/share. Exhibit 89 GE Consumer & Industrial valuation

Exhibit 88 GE Enterprise Solutions valuation GE Enterprise Year Solutions EBIT ($B) 2007 0.7 2008 0.7 2009E 0.5 2010E 0.4 2011E 0.5 2012E 0.5 Average GE shares (bil.) Value ($/share)

Median peer Price/EBIT 7.4 6.5 10.4 9.6 8.8 7.8

Implied value ($B) 5.1 4.5 4.9 4.3 4.2 4.0 4.5 10.6 0.42

Source: First Call, Bernstein analysis and estimates

GE C&I Year EBIT ($B) 2007 1.0 2008 0.4 2009E 0.4 2010E 0.4 2011E 0.6 2012E 0.6 Average GE shares (bil.) Value ($/share)

Median peer Price/EBIT 9.1 9.7 13.4 10.6 8.2 8.1

Implied value ($B) 9.4 3.6 4.9 4.7 4.6 5.2 5.4 10.6 0.51

Source: First Call, Bernstein analysis

U.S. Multi-Industry

With regards to the potential NBCU, we arrive at a value in the mid-$20B range using the average of four different trading multiples (EV/EBITDA, EV/EBIT, EV/sales, P/E) on consensus estimates for peer companies in 2009-11E and our own estimates for NBCU's segment profit. See Exhibit 90 for more detail on the valuations by multiple and year used. For each of the twelve valuation estimates, we used the median multiple on current market prices for the three large media conglomerates that most resemble NBCU's mix of business: News Corp (NWSA), Time Warner (TWX) and Walt Disney Co (DIS). We do not add a transaction premium on top of the market multiple-based valuation; we expect that including the premium, the value would range between $24B and $28B. Note that we use EV as our valuation numerator so as to be consistent in terms of comparing NBCU to other media conglomerates with varying degrees of financial leverage.

2

We do not cover ROK. ETN is covered by Dan Dowd's U.S. Machinery & Capital Goods team.

3

Exposures are based on 2007 sales breakdowns

54

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 90 NBCU Valuation Excluding Acquisition Premium

NBCU Valuation (EXCLUDING ACQUISITION PREMIUM)

2009E

EV/EBIT EV/sales P/E

2010E

EV/EBITDA EV/EBIT EV/sales P/E EV/EBITDA

2011E

valuation multiple used

EV/EBITDA

EV/EBIT EV/sales P/E 5

10

15

20

25

30

35

40

Implied value of NBCU ($B)

Source: Bernstein analysis Note: Grey bars indicate base case valuations +/- 10%

U.S. Multi-Industry

We then combined our NBCU valuation with the C&I and Enterprise Solutions valuations. We adjusted the C&I and Enterprise Solutions figures based on competitive positioning of the businesses. Applying a 10% to 20% premium on these businesses and including our estimate of the potential NBCU deal valuation, we believe GE could get between $32B and $38B, which the company could then direct into the existing infrastructure businesses (Exhibit 91).

55

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 91 Potential cash from divestitures Implied Value / Value 2010 share ($) ($B) P/EBIT Sum of the Parts Base Case (median peer multiples) Enterprise Solutions 0.42 4.5 10.1 Consumer & Industrial 0.51 5.4 12.1 Sum of the Parts Adjusted Scenario Enterprise Solutions 0.34 3.6 8.1 Consumer & Industrial 0.41 4.3 9.7 Adjusted Scenario including NBCU Enterprise Solutions 3.6 Consumer & Industrial 4.3 NBCU 24-28 Total value 32-36 Assuming 10% Premium on Enterprise Solns and C&I: NBCU 4.0 Total value 4.8 NBCU 24-28 Total value 33-37 Assuming 20% Premium on Enterprise Solns and C&I: NBCU 4.3 Total value 5.2 NBCU 24-28 Total value 34-38

Adjustments

Decrease 20%, below average player Decrease 20%, below average player, share loss

Source: Thomson One Analytics and Bernstein estimates

Where the $$ Should Go

U.S. Multi-Industry

We expect that GE will execute some, if not all, of the divestiture activity mentioned above. We expect that armed with somewhere on the order of $32B-$38B, management invest in the infrastructure businesses, in line with previously announced strategies. In 2008, Tech and Energy Infrastructure combined constituted just under half of the entire portfolio (47%) (Exhibit 92). We expect that even if NBCU, C&I, and Enterprise Solutions remain part of the portfolio, this percentage will grow to 53% by 2012 (Exhibit 93). It is likely that this percentage will be even larger, given the removal of NBCU and C&I and the build out of existing and new infrastructure businesses.

56

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 92 Total revenue by segment in 2008

Exhibit 93 Expected revenue by segment in 2012E

GE Rev by Segment, 2012E

GE Rev by Segment, 2008 NBCU 9%

C&I 6% Tech Infra 26%

Capital Finance 38%

Energy Infra 21%

Total = $180.6B Source: Company reports and Bernstein estimates

C&I 7%

Ent Solns 2%

NBCU 11%

Tech Infra 28%

Capital Finance 28%

Energy Infra 24%

Total = $163.7B Source: Company reports and Bernstein estimates

6) More than 2:1 upside/downside valuation trade-off is compelling.

U.S. Multi-Industry

Even with just a 15x multiple on 2011/12 earnings from the industrial businesses and 8x normalized earnings from GE Capital in the same time-frame, we get to nearly $15 for GE's industrial businesses and $4 for GE Capital. For context, this would place GE at roughly 50% of its peak historical market capitalization. Our current downside scenario is still 30% off of 2011/12 EPS in a plausible scenario which would reduce valuation to $12-13 vs. our target price of $19. On current stock price of $14, this suggests more than 2:1 upside/downside. We estimate ~30% downside to $0.70 in 2012 industrial EPS in a plausible scenario where the industrials business experiences another year of -5% or so revenue declines similar to 2009, with increased margin pressure. In this case, the stabilization/recovery takes longer than expected, pushed out one more year. This might stem from a more negative macro economic scenario which would result in even more bearish equipment backlog conversion and similarly negative order rates as well as services growth not materializing. In this case, the impact of fiscal stimulus programs would also take longer to be realized. We assume here that low capacity utilization would persist with commensurate pressure on pricing. In this environment, we would expect to see the biggest weakness across equipment businesses such as Enterprise Solutions, Imaging and Transportation as rail contracts expire. NBCU would continue to face a weak advertising market and pressure on affiliate fees.

57

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 94 Our valuation multiple for GE Capital is conservative relative to peer large banks

Bank BofA Citi Wells Fargo JPMorgan

First Call Avg Target Price 20.55 4.95 32.03 52.94

EPS 2011 2.20 0.39 2.91 4.82

EPS 2012 2.95 0.58 3.69 6.14

2011/12 EPS Implied target 2011/12 avg P/E 2.58 8.0 0.49 10.2 3.30 9.7 5.48 9.7

Average

9.4

GE Capital

8.0

Source: First Call, Bernstein estimates

Financial Statements Exhibit 95 GE Consolidated Income Statement GE Income Statement $M except EPS Goods and Services Financial Revenue

FY08

1Q09

2Q09

3Q09

101,578

113,593

24,420

26,204

25,643

66,301

67,008

13,088

12,797

12,161

CAGR

CAGR

FY09E

FY10E

FY11E

FY12E

FY13E

'06/08

'09/13E

27,684

103,951

102,675

109,895

116,892

123,493

10.9%

4.4%

12,356

50,402

47,330

48,014

46,811

47,072

9.0%

-1.7%

4Q09E

Other/corporate

4,609

1,914

903

81

390

1,369

1,162

1,223

2,044

1,618

-18.6%

4.3%

Total Revenue

172,488

182,515

38,411

39,082

37,799

40,429

155,721

151,167

159,133

165,747

172,184

9.7%

2.5%

Industrial COGS

(73,125)

(83,772)

(18,066)

(18,804)

(18,548)

(20,370)

(75,788)

(74,855)

(80,118)

(85,220)

(90,032)

12.0%

4.4%

(4,431)

(7,518)

(2,336)

(2,817)

(2,868)

(2,533)

(10,554)

(8,920)

(6,776)

(3,633)

(2,760)

56.7%

-28.5%

(22,706)

(25,116)

(5,121)

(4,468)

(4,128)

(4,249)

(17,966)

(15,388)

(13,858)

(12,588)

(12,535)

18.7%

-8.6%

(3,469)

(3,213)

(746)

(779)

(732)

(809)

(3,066)

(3,175)

(3,135)

(3,092)

(3,051)

0.0%

-0.1%

(103,731)

(119,619)

(26,269)

(26,868)

(26,276)

(27,961)

(107,374)

(102,338)

(103,887)

(104,532)

(108,378)

14.7%

0.2%

68,757

62,896

12,142

12,214

11,523

12,468

48,347

48,829

55,245

61,215

63,806

1.8%

7.2%

(40,173)

(42,021)

(9,337)

(8,933)

(9,354)

(9,359)

(36,983)

(35,275)

(36,054)

(36,805)

(37,231)

8.8%

0.2%

EBIT

28,584

20,875

2,805

3,281

2,169

3,109

11,364

13,554

19,192

24,410

26,575

-9.0%

23.7%

Depreciation & Amortization

10,275

11,492

2,731

2,504

2,658

2,624

10,517

10,418

10,464

10,564

10,717

16.6%

0.5%

EBITDA

38,859

32,367

5,536

5,785

4,827

5,733

21,881

23,972

29,655

34,974

37,292

-1.9%

14.3%

Provisions for losses GECS Interest Expense Insurance segment expense Consolidated COGS Gross Profit SG&A and Other Op Exp.

(5)

Non-financial interest exp

(1,056)

(1,093)

EBT

27,528

19,782

Taxes

(4,155)

(1,052)

318

(219)

484

-

15.1%

5.3%

-12.2%

7.1%

-24.5%

0.0%

Tax Rate Minority Interest

U.S. Multi-Industry

FY07

(916)

Earnings, cont ops

22,457

Preferred dividend

-

(641) 18,089 (75)

(85) 2,832 (75)

Earnings, cont ops to common Earnings, discont ops

22,457

Net Income

22,208

17,335

2,736

Net Income to common

22,208

17,260

2,661

Average shares

10,218

10,098

GE Industrial EPS, cont. ops

0.98

GECS EPS, cont. ops

(12) 2,865 (75)

(5) 2,454 (75)

(187) 2,922

(8) 2,914 (75) 2,839 -

2,596

2,419

2,839

2,521

2,344

2,764

10,564

10,609

10,638

1.01

0.17

0.23

1.22

0.77

0.09

Total EPS, cont ops to common

2.20

1.78

EPS to common

2.17

1.72

Dividends Per Share

1.12 52%

Dividend Payout Ratio

2.6%

3.4%

12,735

18,466

23,557

25,691

-9.5%

24.8%

583

(1,790)

(4,117)

(5,099)

(5,528)

-48.4%

-5.5%

14.1%

22.3%

21.6%

21.5%

(772) 10,592

(110) 11,065 (300)

(327) 10,619 (300)

(725)

(450) 13,899 (300)

(853)

(504) 17,954 (300)

(883)

(511) 19,653

-13.8%

46.7%

-3.3%

15.4%

-3.5%

15.8%

(300)

13,599

17,654

19,353

-

-

-

-

10,590

10,319

13,599

17,654

19,353

-8.6%

16.3%

10,290

10,019

13,299

17,354

19,053

-8.8%

16.7%

10,652

10,616

10,662

10,485

10,251

10,006

-1.4%

-1.5%

0.21

0.25

0.86

0.82

0.95

1.09

1.20

7.5%

8.7%

0.03

0.01

0.02

0.16

0.15

0.35

0.62

0.73

-11.5%

47.1%

0.26

0.26

0.22

0.27

1.01

0.97

1.30

1.72

1.93

-2.1%

17.5%

0.26

0.24

0.23

0.27

1.00

0.97

1.30

1.72

1.93

-7.3%

18.0%

1.23

0.32

0.32

0.11

0.10

0.84

0.51

0.67

0.83

0.96

10.7%

3.3%

72%

122%

129%

47%

38%

84%

53%

51%

48%

50%

19%

-12%

(194)

10,765

(819)

10,319

(21)

2,790

(194) 1,975

40

(679)

2,757

(185) 3,096

2,379

(249)

18,014

(206) 2,599

(175)

Year-over-Year Growth Total Revenue

13.8%

5.8%

-9.0%

-16.6%

-20.0%

-12.5%

-14.7%

-2.9%

5.3%

4.2%

3.9%

EBIT

13.5%

-27.0%

-50.7%

-52.2%

-59.9%

6.5%

-45.6%

19.3%

41.6%

27.2%

8.9%

Earnings, cont ops to common

16.1%

-19.8%

-36.6%

-48.3%

-46.9%

-25.1%

-40.2%

-4.1%

31.8%

29.8%

9.6%

EPS, cont ops to common

18.1%

-18.8%

-40.0%

-51.3%

-50.2%

-26.4%

-43.2%

-4.6%

34.0%

32.8%

12.3%

Source: Company reports and Bernstein estimates and analysis

58

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 96 GE Industrial Segment Forecast GE Segment Detail

23,496

10.9% 21.6%

5.3% 5.6% 3.6%

2Q09

3Q09

4Q09E

Technology Infrastructure

42,801

46,316

10,436

10,555

10,209

11,560

42,760

42,223

45,824

49,370

52,590

16,819

19,239

4,817

4,619

4,542

4,897

18,875

18,783

20,661

22,314

Transportation Energy Infrastructure NBCU C&I Total GE Industrial

FY12E

CAGR

1Q09

Enterprise Solutions

FY11E

'09/13E

FY08

Healthcare

FY10E

'06/08

FY07

Aviation

FY09E

CAGR

$M Segment Revenue

FY13E

4,462

4,710

913

918

904

990

3,725

3,504

3,749

4,049

4,292

9.2%

16,997

17,392

3,545

3,964

3,801

4,485

15,795

15,869

16,853

18,033

19,476

2.5%

5.4%

4,523

5,016

1,171

1,069

970

1,199

4,409

4,110

4,603

5,017

5,369

9.8%

5.0%

30,698

38,571

8,239

9,577

8,917

9,439

36,172

34,448

36,563

38,804

41,181

23.7%

3.3%

15,416

16,969

3,524

3,565

4,079

4,076

15,244

15,805

16,596

17,260

17,864

2.4%

4.0%

12,663

11,737

2,221

2,507

2,438

2,610

9,776

10,199

10,913

11,458

11,859

-5.7%

4.9%

101,578

113,593

24,420

26,204

25,643

27,684

103,951

102,675

109,895

116,892

123,493

10.9%

4.4%

Segment Revenue Growth Technology Infrastructure

13.6%

8.2%

-0.2%

-10.9%

-10.8%

-7.9%

-7.7%

-1.3%

8.5%

7.7%

6.5%

Aviation

29.2%

14.4%

11.5%

-6.2%

-6.2%

-5.0%

-1.9%

-0.5%

10.0%

8.0%

5.3%

Enterprise Solutions

6.0%

12.9%

5.6%

-17.4%

-25.7%

-24.2%

-16.0%

-20.9%

-5.9%

7.0%

8.0%

Healthcare

2.6%

2.3%

-8.8%

-11.7%

-9.3%

-7.0%

-9.2%

0.5%

6.2%

7.0%

8.0%

Transportation

8.8%

10.9%

2.0%

-11.1%

-22.8%

-15.0%

-12.1%

-6.8%

12.0%

9.0%

7.0%

Energy Infrastructure

21.7%

25.6%

6.7%

-1.0%

-8.7%

-17.3%

-6.2%

-4.8%

6.1%

6.1%

6.1%

NBCU

-4.8%

10.1%

-1.7%

-8.2%

-19.6%

-8.0%

-10.2%

3.7%

5.0%

4.0%

3.5%

C&I

-4.1%

-7.3%

-22.4%

-20.1%

-18.4%

-5.0%

-16.7%

4.3%

7.0%

5.0%

3.5%

Total GE Industrial

10.1%

11.8%

-0.9%

-8.2%

-12.4%

-11.1%

-8.5%

-1.2%

7.0%

6.4%

5.6%

7,883

8,152

1,803

1,833

1,748

2,089

7,473

7,399

8,155

8,892

9,517

5.6%

6.2%

3,222

3,684

1,080

923

970

1,020

3,993

3,939

4,374

4,746

4,974

14.7%

5.6%

697

691

102

90

103

138

433

404

444

492

534

5.6%

5.4%

3,056

2,851

411

590

508

764

2,273

2,360

2,540

2,772

3,052

-4.7%

7.6%

936

962

217

236

177

175

805

729

830

915

990

11.5%

5.3%

Energy Infrastructure NBCU

4,817

6,080

1,273

1,792

1,582

1,693

6,340

5,958

6,380

6,809

7,181

31.5%

3.2%

3,107

3,131

391

539

732

775

2,437

2,734

3,119

3,417

3,518

3.6%

9.6%

C&I

1,034

365

36

111

117

99

363

446

564

650

684

-38.7%

17.1%

16,841

17,728

3,503

4,275

4,179

4,657

16,614

16,536

18,218

19,767

20,901

9.8%

5.9%

Segment Profit Technology Infrastructure Aviation Enterprise Solutions Healthcare Transportation

Total GE Industrial Segment Profit Growth Technology Infrastructure

7.9%

3.4%

6.0%

-10.8%

-8.0%

-16.3%

-8.3%

-1.0%

10.2%

9.0%

7.0%

Aviation

15.0%

14.3%

39.4%

1.0%

16.3%

-12.2%

8.4%

-1.3%

11.0%

8.5%

4.8%

Enterprise Solutions

12.4%

-0.9%

-33.8%

-44.4%

-44.9%

-26.5%

-37.3%

-6.6%

9.8%

10.7%

8.6%

Healthcare

-2.7%

-6.7%

-22.2%

-21.0%

-19.9%

-18.9%

-20.3%

3.8%

7.6%

9.1%

10.1%

Transportation

20.9%

2.8%

-14.6%

-2.1%

-30.6%

-17.3%

-16.3%

-9.5%

13.9%

10.2%

8.2%

36.9%

26.2%

19.0%

13.5%

11.0%

-15.6%

4.3%

-6.0%

7.1%

6.7%

5.5%

6.4%

0.8%

-45.1%

-40.7%

13.5%

-10.4%

-22.2%

12.2%

14.1%

9.5%

3.0%

6.6%

-64.7%

-75.0%

-19.6%

148.9%

176.2%

-0.4%

22.6%

26.6%

15.2%

5.3%

14.4%

5.3%

-3.4%

-8.7%

4.0%

-13.8%

-6.3%

-0.5%

10.2%

8.5%

5.7%

Energy Infrastructure NBCU C&I Total GE Industrial Segment Margin

U.S. Multi-Industry

Technology Infrastructure

18.4%

17.6%

17.3%

17.4%

17.1%

18.1%

17.5%

17.5%

17.8%

18.0%

18.1%

Aviation

19.2%

19.1%

22.4%

20.0%

21.4%

20.8%

21.2%

21.0%

21.2%

21.3%

21.2%

Enterprise Solutions

15.6%

14.7%

11.2%

9.8%

11.4%

14.0%

11.6%

11.5%

11.8%

12.1%

12.4%

Healthcare

18.0%

16.4%

11.6%

14.9%

13.4%

17.0%

14.4%

14.9%

15.1%

15.4%

15.7%

Transportation

20.7%

19.2%

18.5%

22.1%

18.2%

14.6%

18.3%

17.7%

18.0%

18.2%

18.4%

15.7%

15.8%

15.5%

18.7%

17.7%

17.9%

17.5%

17.3%

17.4%

17.5%

17.4%

20.2%

18.5%

11.1%

15.1%

17.9%

19.0%

16.0%

17.3%

18.8%

19.8%

19.7%

Energy Infrastructure NBCU C&I Total GE Industrial

8.2%

3.1%

1.6%

4.4%

4.8%

3.8%

3.7%

4.4%

5.2%

5.7%

5.8%

16.6%

15.6%

14.3%

16.3%

16.3%

16.8%

16.0%

16.1%

16.6%

16.9%

16.9%

Source: Company reports and Bernstein estimates and analysis

59

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 97 GE Industrial Income Statement GE Industrial Income Statement $M Sales of goods and services Other income GECS earnings, cont ops Total Revenue

CAGR FY07

CAGR

FY08

1Q09

2Q09

3Q09

4Q09E

FY09E

FY10E

FY11E

FY12E

FY13E

'06/08E '09/13E

99,796

112,014

24,022

26,012

25,125

27,534

102,766

101,625

108,740

115,656

122,171

11.6%

4.4%

3,371

1,965

479

80

476

150

1,185

1,050

1,155

1,236

1,322

-7.7%

2.8%

12,417

7,774

961

349

133

190

1,562

1,475

3,568

6,341

7,232

-12.8%

46.7%

115,584

121,753

25,462

26,441

25,734

27,873

105,512

104,150

113,462

123,233

130,725

9.0%

5.5%

73,485

83,273

18,009

18,780

18,563

20,370

75,788

74,855

80,118

85,220

90,032

12.9%

4.4%

1,993

2,153

376

348

352

362

1,438

1,485

1,523

1,563

1,608

13.6%

2.8%

14,148

14,401

3,364

3,556

3,714

3,739

14,380

13,900

14,198

14,274

14,931

5.7%

0.9%

89,626

99,827

21,749

22,684

22,629

24,471

91,606

90,240

95,840

101,056

106,572

11.8%

3.9%

EBT, cont ops

25,958

21,926

3,713

3,757

3,105

3,402

13,906

13,910

17,623

22,177

24,154

-1.3%

14.8%

Taxes

(2,794)

(3,427)

(2,893)

(3,109)

(3,514)

(3,959)

(4,230)

11,013

10,801

14,109

18,218

19,924

-3.7%

16.0%

(1,562)

(1,475)

(3,568)

(6,341)

(7,232)

9,451

9,326

10,541

11,877

12,691

4.9%

7.6%

COGS Interest and other financial SG&A Total Costs

Earnings, cont ops

23,164

18,499

less: GECS earnings, cont. ops

(12,417)

(7,774)

Industrial earnings, cont. ops

10,747

10,725

Preferred dividends Minority interest

-

(961) 1,910 (75) (39)

2,860 (349) 2,511 (75)

(654) 2,451 (133) 2,318 (75)

(500) 2,902 (190) 2,712 (75)

(300) (29)

(300) (255)

(300) (330)

(300) (384)

(300)

5

3

2

10,040

10,240

1,796

2,441

2,246

2,639

9,122

8,771

9,911

11,193

12,000

5.9%

7.1%

GE shares

10,218

10,098

10,564

10,609

10,638

10,652

10,616

10,662

10,485

10,251

10,006

-1.4%

-1.5%

0.98

1.01

0.17

0.23

0.21

0.25

0.86

0.82

0.95

1.09

1.20

7.5%

8.7%

26,311

28,741

26,977

26,770

28,621

30,437

32,139

8.2%

4.5%

10.9%

8.1%

Gross profit

(410)

2,871

(897)

Industrial earnings, to common

GE Industrial EPS, cont. ops

(707)

(75)

(842)

(391)

6,013

7,232

6,562

7,163

Gross margin

26.4%

25.7%

25.0%

27.8%

26.1%

26.0%

26.3%

26.3%

26.3%

26.3%

26.3%

SG&A as % of sales

14.2%

12.9%

14.0%

13.7%

14.8%

13.6%

14.0%

13.7%

13.1%

12.3%

12.2%

2,649

3,676

2,848

3,424

11.0%

14.1%

11.3%

12.4%

Operating profit Operating profit margin

12,163 12.2%

14,340 12.8%

12,597 12.3%

12,870 12.7%

14,423 13.3%

16,163 14.0%

17,208 14.1%

U.S. Multi-Industry

Source: Company reports and Bernstein estimates and analysis

60

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 98 GECS Income Statement GE Capital Services Income Statement $M Revenue

FY07

FY08

CLL

1Q09

2Q09

3Q09

4Q09E

FY09E

FY10E

FY11E

FY12E

FY13E

CAGR

CAGR

'06/08E

'09/13E -1.4%

27,267

26,742

5,578

5,219

4,668

4,670

20,135

18,096

19,030

18,717

19,069

1.7%

Real Estate

7,021

6,646

975

1,013

982

986

3,956

3,905

4,412

5,031

5,512

15.1%

8.6%

GE Money

24,769

25,012

4,747

4,883

4,878

4,993

19,501

18,496

17,358

15,514

14,687

13.2%

-6.8%

GECAS

4,839

4,901

1,144

1,192

1,150

1,202

4,688

4,772

5,035

5,219

5,376

6.1%

3.5%

EFS

2,405

3,707

644

490

483

505

2,122

2,062

2,179

2,330

2,429

49.3%

3.4%

Corporate items and elims Total Revenue

5,635

4,279

1,342

634

585

550

3,111

2,364

2,329

2,388

2,484

-7.2%

-5.5%

71,936

71,287

14,430

13,431

12,746

12,906

53,513

49,694

50,343

49,199

49,556

7.8%

-1.9%

Costs and Expenses Interest

22,706

25,116

5,121

4,468

4,128

4,249

17,966

15,388

13,858

12,588

12,535

18.7%

-8.6%

Operating and admin

18,311

17,352

3,648

3,324

3,137

3,031

13,140

11,864

12,540

12,836

13,081

2.6%

-0.1%

Costs of goods sold

628

1,517

224

164

181

186

755

736

777

831

866

-17.0%

3.5%

Contracts, insur & annuity

3,647

3,421

773

823

785

809

3,190

3,175

3,135

3,092

3,051

0.0%

-1.1%

Provision for losses

4,431

7,518

2,336

2,817

2,868

2,533

10,554

8,920

6,776

3,633

2,760

56.7%

-28.5%

100

1,403

300

200

575

350

1,425

1,200

700

300

200

8,126

9,330

2,181

1,947

2,069

2,039

8,236

8,111

8,146

8,198

8,294

19.8%

0.2%

209

231

46

17

8

10

81

72

120

120

120

-1.5%

10.3%

58,158

65,888

14,629

13,760

13,751

13,206

55,346

49,466

46,052

41,598

40,907

15.1%

-7.3%

228

4,291

-12.8%

45.5%

-18.6%

48.4%

Impairments D&A Minority interest Total Costs Earnings EBT

13,778

5,399

Tax benefit (expense) Earnings, continuing ops

(1,361)

2,375

1,160

12,417

7,774

961

Gain (loss), discont ops

(2,116)

Net Earnings

10,301

7,055

7,291

2,351

71%

33%

10,218

Implied EPS Implied EPS, cont. ops

Dividend to GE Payout ratio GE common shares

(199)

(329)

(1,005)

(300)

(1,833)

678

1,138

500

3,476

1,319

7,601

8,650

(1,140)

(1,297)

1,643

1,547 76

3,688

6,461

7,352

31

13

5

1,518

1,623

3,719

6,474

7,357 8,829

(604)

349

133

200

(193)

40

32

957

156

173

232

-

-

-

-

-

1,263

4,834

8,416

0%

0%

0%

0%

0%

78%

130%

130%

120%

10,098

10,564

10,609

10,638

10,652

10,616

10,662

10,485

10,251

10,006

-1.4%

-1.5%

1.01

0.70

0.09

0.01

0.02

0.02

0.14

0.15

0.35

0.62

0.73

-17.5%

50.0%

1.22

0.77

0.09

0.03

0.01

0.02

0.16

0.15

0.35

0.62

0.73

-11.5%

47.1%

(719)

(4)

(125)

Pre-provn earnings, pre-tax

18,209

12,917

2,137

2,488

1,863

2,233

8,721

9,148

11,067

11,234

11,410

-6.2%

7.0%

Pre-provn earnings, after-tax

16,848

15,292

3,297

3,166

3,001

2,733

12,197

10,467

10,464

10,094

10,112

7.3%

-4.6%

Year-over-Year Growth Total Revenue

17.3%

-0.9%

-20.0%

-29.4%

-30.8%

-18.2%

-24.9%

-7.1%

1.3%

-2.3%

0.7%

Net Earnings

-3.3%

-31.5%

-60.0%

-93.6%

-90.6%

-39.5%

-78.5%

6.9%

129.1%

74.1%

13.6%

U.S. Multi-Industry

Source: Company reports and Bernstein estimates and analysis

61

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 99 GECS Balance Sheet GECS Balance Sheet 9,439

37,486

45,240

50,017

56,898

69,455

69,455

46,460

28,408

15,665

15,301

73.6%

-31.5%

Investment securities

44,941

41,236

41,783

45,168

52,723

51,932

51,932

48,886

46,018

43,318

40,777

-6.8%

-5.9%

63

77

65

73

79

83

83

91

89

97

102

19.4%

5.5%

384,067

372,456

355,036

359,478

348,518

341,548

341,548

310,360

280,474

253,632

254,594

6.7%

-7.1%

Financing receivables - net

FY08

1Q09

2Q09

3Q09

4Q09E

FY09E

FY10E

FY11E

FY12E

FY13E

CAGR

FY07

Inventories

'06/08E '09/13E

Other receivables

22,078

18,636

17,728

18,719

18,625

13,311

13,311

16,411

14,605

14,586

15,299

-7.3%

3.5%

PP&E, net

63,746

64,097

58,190

58,649

58,712

58,376

58,376

57,529

57,806

57,985

58,980

5.2%

0.3%

Goodwill

25,427

25,365

24,437

27,315

28,184

28,325

28,325

28,896

29,478

30,072

30,678

5.6%

2.0%

4,509

3,613

3,416

4,009

3,838

3,857

3,857

3,935

4,014

4,095

4,178

7.3%

2.0%

83,392

85,721

88,180

85,646

87,941

86,311

86,311

79,229

72,369

66,232

66,400

20.2%

-6.3%

8,823

1,659

1,464

1,462

1,533

1,380

1,380

905

594

390

256 8.1%

-7.2%

Other intangibles - net Other assets Assets of discont ops Businesses held for sale

-

10,556

-

232

1,263

632

632

39

2

0

0

Total assets

646,485

660,902

635,539

650,768

658,314

655,210

655,210

592,742

533,858

486,072

486,565

Short-term borrowings

192,420

193,533

175,676

173,458

160,938

164,014

164,014

156,067

150,239

146,903

149,252

5.7%

-2.3%

14,714

13,882

11,718

12,401

12,501

10,732

10,732

10,676

10,172

9,883

10,268

0.4%

-1.1%

205,276

Accounts payable Long-term borrowings

308,502

321,068

317,412

329,129

347,415

340,467

340,467

292,442

243,250

204,457

Contracts, insur losses & annuity

34,359

34,369

33,946

32,831

32,948

32,586

32,586

31,175

29,826

28,535

27,300

-0.6%

-4.3%

Other liabilities

26,522

32,090

23,846

24,886

21,021

23,948

23,948

21,224

19,602

17,968

18,051

24.6%

-6.8%

9,099

8,533

9,051

6,773

9,434

9,534

9,534

9,798

9,677

9,449

9,190

-18.6%

-0.9%

-

636

-

196

143

129

129

84

55

36

24

Deferred income taxes Businesses held for sale Liabilities of discon ops

1,692

1,243

1,165

1,305

1,279

1,023

1,023

419

172

70

29

Total liabilities

587,308

605,354

572,814

580,979

585,679

582,432

582,432

521,886

462,993

417,302

419,390

9.0%

-7.9%

Minority interest

1,501

2,269

1,969

1,921

1,977

1,888

1,888

1,606

1,419

1,267

1,143

7.9%

-11.8%

Capital stock Investment securities Currency translation adj Cash flow hedges Benefit plans Total accumulated gains - net

11

11

11

110

(3,097)

(3,733)

7,472

(1,258)

(4,307)

(3,134)

(2,438)

(727) (105) 6,750

11 (2,176) 494 (1,884)

11

11

11

11

11

11

11

(478)

(478)

(478)

(478)

(478)

(478)

(478)

1,409

1,409

1,409

1,409

1,409

1,409

1,409

(1,894)

(1,894)

(1,894)

(1,894)

(1,894)

(1,894)

(1,894)

(367)

(359)

(376)

(374)

(374)

(374)

(374)

(374)

(374)

(374)

(7,856)

(10,837)

(3,942)

(1,337)

(1,337)

(1,337)

(1,337)

(1,337)

(1,337)

(1,337)

Additional paid-in capital

12,564

18,069

27,570

27,569

27,568

27,568

27,568

27,568

28,879

28,879

28,879

20.1%

1.2%

Retained earnings

38,351

43,055

44,012

44,230

44,416

44,648

44,648

43,008

41,892

39,950

38,479

10.0%

-3.6%

Total shareowners' equity

57,676

53,279

60,756

67,868

70,658

70,890

70,890

69,250

69,445

67,503

66,031

-0.8%

-1.8%

Total liabilities and equity

646,485

660,902

635,539

650,768

658,314

655,210

655,210

592,742

533,858

486,072

486,565

8.1%

-7.2%

Balance Sheet Metrics Total Debt

500,922

514,601

493,088

502,587

508,353

504,480

504,480

448,509

393,489

351,360

354,529

9.9%

-8.4%

Net Debt

491,483

477,115

447,848

452,570

451,455

435,025

435,025

402,049

365,081

335,696

339,228

7.4%

-6.0%

Total Capital

549,159

530,394

508,604

520,438

522,113

505,915

505,915

471,299

434,526

403,199

405,259

6.5%

-5.4%

Gross Receivables

388,305

377,781

360,743

366,078

355,871

348,976

348,976

316,176

285,160

257,853

258,658

6.9%

-7.2%

Avg Gross Receivables

359,570

383,043

369,266

363,418

360,982

352,427

363,379

332,576

300,668

271,507

258,255

TCE

U.S. Multi-Industry

CAGR

$M Cash and equivalents

27,740

24,301

32,903

36,544

38,636

38,708

38,708

36,419

35,953

33,336

31,176

Net Charge-offs

3,698

5,358

1,569

1,914

1,918

2,223

7,624

9,809

7,435

3,793

2,721

Loan Loss Reserve

4,238

5,325

5,707

6,600

7,353

7,428

7,428

5,816

4,686

4,221

4,064

Total Debt to Capital

91%

97%

97%

97%

97%

100%

100%

95%

91%

87%

87%

Net Debt to Capital

89%

90%

88%

87%

86%

86%

86%

85%

84%

83%

84%

Net Debt to Equity

8.5

9.0

7.4

6.7

6.4

6.1

6.1

5.8

5.3

5.0

5.1

4.5%

3.8%

5.4%

5.9%

6.2%

6.2%

6.2%

6.5%

7.2%

7.4%

6.9%

TCE/TA TCE + LLR / TA

5.2%

4.7%

6.4%

7.0%

7.3%

7.4%

7.4%

7.5%

8.1%

8.3%

7.8%

LLR rate %

1.09%

1.41%

1.58%

1.80%

2.07%

2.13%

2.13%

1.84%

1.64%

1.64%

1.57%

NCO rate %

1.03%

1.40%

1.76%

2.11%

2.13%

2.42%

2.10%

2.95%

2.47%

1.40%

1.05%

Effective interest rate

4.9%

4.9%

4.2%

3.6%

3.3%

3.2%

3.5%

3.2%

3.3%

3.4%

3.6%

Book value / share

5.64

5.28

5.75

6.40

6.64

6.66

6.68

6.50

6.62

6.59

6.60

Tangible book value / share

2.71

2.41

3.11

3.44

3.63

3.63

3.65

3.42

3.43

3.25

3.12

ROA pre-tax

2.1%

0.8%

-0.1%

-0.2%

-0.6%

-0.2%

-0.3%

0.0%

0.8%

1.6%

1.8%

ROA

2.0%

1.2%

0.6%

0.2%

0.1%

0.1%

0.2%

0.2%

0.7%

1.3%

1.5%

ROE pre-tax

23.9%

10.1%

-1.4%

-1.9%

-5.7%

-1.6%

-2.6%

0.3%

6.2%

11.3%

13.1%

ROE

21.5%

14.6%

6.6%

2.1%

0.8%

1.1%

2.3%

2.2%

5.3%

9.6%

11.1%

ROTCE

44.8%

32.0%

12.1%

3.8%

1.4%

2.0%

4.2%

4.2%

10.3%

19.4%

23.6%

Source: Company reports and Bernstein estimates and analysis

62

November 6, 2009

Steven E. Winoker (Senior Analyst) • [email protected] • +1-212-756-4294

Exhibit 100 Industrial segments YoY growth rates, quarterly 1Q09 -0.2% 6.7% -22.4% -1.7% -0.9%

Tech Infrastructure Energy Infrastructure C&I NBCU Total Industrial segments

2Q09 -10.9% -1.0% -20.1% -8.2% -8.2%

3Q09 -10.8% -8.7% -18.4% -19.6% -12.4%

4Q09E -7.9% -17.3% -5.0% -8.0% -11.1%

1Q10E -5.5% -12.8% 2.0% -3.0% -6.9%

2Q10 -2.6% -8.0% 4.0% 5.0% -2.9%

3Q10E 0.3% -2.5% 5.0% 6.0% 0.7%

4Q10E 2.4% 3.4% 6.0% 6.0% 3.6%

Source: Company reports, Bernstein estimates

Disclosure Appendix Valuation Methodology

We prefer Price to Forward Earnings relative to the S&P500 (rel P/FE) due to its predictive NTM results in quintile analysis across companies and time periods and its long-term stability for mature businesses. We believe it is appropriate for investors to consider fair value for multi-industry companies on the basis of longer term "recovering" earnings—for our companies we believe an average of 2011 and 2012 EPS should represent recovering early to mid-cycle earnings potential. This essentially represents EPS from mid-2011 to mid-2012. We discount the earnings 1 year back to mid-2010 so that our target price represents our view of expected stock price 12-months hence. Our target prices are derived with the following formula: [EPS x long-term rel P/FE x S&P500 long-term P/FE + 0.75 yr x dividend ] / (1 + cost of equity)^0.75 yr. See Exhibit 101 for a summary of the walk from our EPS estimates to target prices. Exhibit 101 Valuation summary

U.S. Multi-Industry

Ticker GE Industrial GE Capital GE Total

2011E/12E EPS 1.02 0.49 1.51

Rel P/FE 1.05 nm

SPX P/FE 15.00 nm

Abs P/FE 15.75 8.00

undisc. target price 16 4

Cost of equity 8.9% 8.9%

Div 0.40 -

discounted target price 15.40 3.65 19

Mkt price 11/4/2009

14

Implied Upside

34.2%

Rating

O

Source: Bernstein estimates

Risks

For GE Industrials: Besides generally deteriorating macro conditions, key risks for GE's Industrial businesses include order cancellations and order rate declines, aero and energy cycle weakness, healthcare reform, falling government/municipal spending on infrastructure, depressed advertising spending (for NBCU), and falling energy investment due to low commodity prices. Excess capacity and low utilization may drive additional pricing pressure. For GE Capital: Key risks include rising net charge-off rates, rising asset impairment write-downs, lowered ability to generate tax benefits, and the potential for increasing government regulation of financial institutions which may constrict asset and leverage levels.

63

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Bernstein analysts are compensated based on aggregate contributions to the research franchise as measured by account penetration, productivity and proactivity of investment ideas. No analysts are compensated based on performance in, or contributions to, generating investment banking revenues.

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Bernstein rates stocks based on forecasts of relative performance for the next 6-12 months versus the S&P 500 for stocks listed on the U.S. and Canadian exchanges, versus the MSCI Pan Europe Index for stocks listed on the European exchanges (except for Russian companies), versus the MSCI Emerging Markets Index for Russian companies and stocks listed on emerging markets exchanges outside of the Asia Pacific region, and versus the MSCI Asia Pacific ex-Japan Index for stocks listed on the Asian (ex-Japan) exchanges – unless otherwise specified. We have three categories of ratings: Outperform: Stock will outpace the market index by more than 15 pp in the year ahead. Market-Perform: Stock will perform in line with the market index to within +/-15 pp in the year ahead. Underperform: Stock will trail the performance of the market index by more than 15 pp in the year ahead. Not Rated: The stock Rating, Target Price and estimates (if any) have been suspended temporarily.

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As of 11/04/2009, Bernstein's ratings were distributed as follows: Outperform - 45.3% (0.0% banking clients); Market-Perform - 46.7% (0.0% banking clients); Underperform - 8.0% (0.0% banking clients); Not Rated - .0% (0.0% banking clients). The numbers in parentheses represent the percentage of companies in each category to whom Bernstein provided investment banking services within the last twelve (12) months.

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Accounts over which Bernstein and/or their affiliates exercise investment discretion own more than 1% of the outstanding common stock of the following companies GE / General Electric Co.

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The following companies are or during the past twelve (12) months were clients of Bernstein, which provided non-investment bankingsecurities related services and received compensation for such services GE / General Electric Co.

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An affiliate of Bernstein received compensation for non-investment banking-securities related services from the following companies GE / General Electric Co.

12-Month Rating History as of 11/04/2009 Ticker Rating Changes GE

M (IC) 02/05/09

O (DC) 07/21/04

Rating Guide: O - Outperform, M - Market-Perform, U - Underperform, N - Not Rated Rating Actions: IC - Initiated Coverage, DC - Dropped Coverage, RC - Rating Change

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