What’s your ideal portfolio mix for long-term investing? Post your thoughts here and see follow-up responses from C-Suite editor, Geoff Colvin.

How important is it to you that companies embrace sustainability in their operations or in the products they offer? Would you be willing to pay more for eco-friendly products, and has the recession influenced your views on the matter?

Post your thoughts here and see follow-up responses from C-Suite editor, Geoff Colvin.

Do you think the recession is over, and are you ready to start spending again? Post your thoughts here and see follow-up responses from C-Suite editor, Geoff Colvin.

Given your experience of public education, what should we do to fix America’s schools?  Post your thoughts here and see follow-up responses from C-Suite editor, Geoff Colvin.

Are you planning on buying a new house or investing in your current house during the next year? Post your comments and see follow-up responses from C-Suite editor Geoff Colvin.

What do you think of the No. 2 company on the Fortune 500 list this year? Should they be in the top 5? Have you worked for the company, or bought its products? Has the recession affected your opinion of big companies? Tell us what you think. The best replies will be published here, and possibly in a future story on CNNMoney.com.

During the second half, attendees were treated to brown bag lunches and a look at UK mortgages, Eastern Europe, and securities held for investment. The stock fell steadily amid a larger market rout, though investor sentiment had kept it buoyant in the morning. During the Q&A the stock went into negative territory, and ended the day down about 1.8%.

12:15

As things start up with UK mortgages and consumer finance, I’ll share some feedback:
Reading through the GE Presentation. A former employee writes that he’s not whether all the emphasis on “lease-to-hold” is a product of strategy or necessity due to the fact that after Oct 2008 the third party debt markets dried up. If you’re enterprising, maybe it’s time to start looking at whether GECC’s capital markets team syndicated its equipment portfolio to third party investors. If anyone out there has thoughts on this, let me know!

Looking at US consumer finance, the company says that in 2007, when it saw the US consumer weaken, it tightened up exposures to the market.
If you go to your Bloomberg terminal and pull up some of the master trust documents inked on credit card backed securities issued by GECC, you can dig deeper on this issue. They may have seen problems, but cards were still being issued in 2007 to customers at stores like Wal-Mart, the Gap, and Sam’s Club in locations like Florida and California. Sanford Bernstein analyst Steve Winoker, in an earlier research note, had asked for details here. Am interested to see this deep dive into where accounts are and with which retailers. They also did white label credit cards for JC Penney and Mervyn’s, along with dozens of other big retailers.

This is their case for why white label credit cards are a better business than bank cards, as well as underwriting actions taken when they saw the market deteriorate.

They have taken actions to account for higher unemployment, though it seems up 9% (here’s a delinquency-to-unemployment correlation table) and are driving yields to offset losses.

The piece of the portfolio under stress, the say, could be a problem because once a consumer gets into trouble in this environment it’s so hard for them to come out. They’ve added 1,000 collectors. And then they put up their anticipated stress case for consumers, global, rather than US only. Analysts have said that they are concerned specifically about the US consumer, so let’s hope we get a more granular slide. There is a slide for the sales finance stress case. I had to take a call, so if you have the US consumer slide or a comment, please let me know.

12:40

Mortgages. UK is the worry and they say in the UK they have solid underwriting and aggressive collections all over the world.

While some seem pleased by the “how we do it” tone of the presentation, some seem not impressed by the emphasis on management skill (we have great standards) and would like to see stress case scenarios that look at what happens if unemployment goes above the 10% mark.

12:45
Stock update. GE shares have given back about half of their earlier gains, but are still up more than 3%.

They’re shrinking the mortgage business everywhere and as of 2008 the mortgage portfolio composition shows that UK mortgages made up 51% of the total.

Here’s the UK mortgage detail. About 23% of the UK home lending book is a second mortgage. Once again, emphasize originate to hold. They also say the UK mortgage market and consumer was significantly different from the US. Any UK pros out there care to comment? Here is their UK economic environment forecast or 2009 and the way GECC has layered risk and losses.

12:56
With about an hour left in the meeting, it’s almost q&a time; and while a lot of data has been presented we’ll see what the audience thinks has been left out.

An interesting aside from a listener… the mortgage team is very proud of the fact that it has mortgage insurance on a lot of the portfolio. AIG, their main insurance provider, is in trouble.

Here is their UK mortgage stress scenario.

1:06

They’re talking Eastern Europe, thanks largely to questions first raised by Peter Eavis over at the Wall Street Journal about the durability of the portfolio.

They do think they’ll see slower growth in the area. They reduced origination in 2008 and increased collections. (Increasing collection capacity is a theme running through the presentation).

They are saying that this is still an attractive business despite near term volatility. They’re working with the No. 5 bank in Poland, the No. 4 bank in the Czech Republic, and the No. 8 bank in Hungary. Let us hope that these top tier banks in Poland, the Czech Republic, and Hungary had better underwriting standards and risk controls than, say, US counterparts like Wachovia and Citigroup.

1:18

The stock is now down on the day by about 1%. GE was strong in the morning up 6%, gave back half its gains around noon, and then continued to fall during the UK mortgage and Eastern European bank portion of the presentation. BUT, it’s important to mention that the markets were being dragged down by financial stocks in the morning and that GE may have succumbed to the trend. The stock could pop back into positive territory.

1:29 GE’s been in Eastern Europe for 15 years, which is good. Since 1994, when the company entered the area, there was tons of turmoil and backtracking as different countries opened to capitalism and stabilized. But as for how they’ll handle a severe, never-before-seen downturn, that is still an open question. GE has a stress test for this area. But I wonder, was there an adequate stress test, say, in the beginning of 2007, for what was to happen to US homeowners and banks?

1:38

Just noticed there are comments to this blog… will start getting them up as the company goes through their summary.

1:42
See $2 billion to $2.5 billion in earnings for GECC. S&P sees little to none in earnings.

The company sees a worse case scenario of $18.4 billion in impairments and credit costs for GECC.

1:45

Overall, executives are striking a pretty positive tone and the stock is up again. Heading into the Q&A I’m getting a little bit of feedback.

One analyst thought that the earnings stress cases met expectations, and that expectations were for them to be pretty bad. But the equity downside might have been more limited than expected, which is good for sentiment.

Of course, there are always a some bears about. Another listener says he thinks GECC still needs to be more aggressive about assumptions re: unemployment and GDP, as well as consumer credit card defaults. And Eavis that WSJ still thinks the big question is whether they’ll need to raise more capital.

2:03

GECC took the average of the top 3 banks and compared coverage ratios. GECC has 6.3% of reserve coverage against its US credit card portfolio v. 7.8% for the banks. GECC has 5.46% reserve for sales financing v. 3.1% for the banks.

2:06

For the investment securities book (i.e. bonds that the company holds), about half the book is in corporate debt. Most of their subprime mortgage backed bonds are wrapped by monoline insurers including FSA, MBIA, Ambac, and FGIC.

They also provided a list of all the foreign banks in which the company has a stake.

2:19

Mike is wrapping it up “five hours, 20 minutes, one fire alarm, and 160 pages later.” The good thing is that this move to be more transparent has worked for GE and soothed nerves. It seems like the problem for the stock wasn’t necessarily weakness in the book, but a lack of transparency and company assurances that everything would be fine, that they wouldn’t lose the AAA, and that they wouldn’t have to cut the dividend to save cash.

The company today came out with loss projections and lowered its earnings estimate by quite a bit, and the stock is still up 1%. Maybe investors just needed to know they weren’t dealing with a black box?

2:29

Here is their view on Q1.

I’m hearing that bond desks are still feeling cautious about the company’s default assumptions and full year outlook, but not acting. The next big catalyst will be when we finally see earnings strength or weakness.

It’s late. Here are a couple of highlights from the Q&A:

On GECC earnings:
GECC said it should generate between $2 billion and $2.5 billion in net income in 2009 if unemployment averages 8.4% this year and the U.S. economy shrinks by 2% (check out the full WSJ story here). But in a more extreme recession, where unemployment averages 8.9% for the year and the economy shrinks 3.3%, GE said the finance unit would break even. Someone in the audience mentions that most of the $2 billion to $2.5 billion in earnings comes from a tax benefit, rather than actual earnings. He wants to know whether the company has taken all the costs out in these calculations or if there is a new target.

Management says cost take outs are ongoing.

Interesting. As pointed out by this question and others, management has left room for the possibility that GECC will, as predicted by S&P, earn nothing in the quarter.

Also, a Barclay’s analyst asked about the tax assumptions. People don’t seem comfortable with so much of earnings riding on a tax benefit.

Someone asks if the company has a benchmark for impairments and losses this time around compared with during other recessions.

GECC says it’s tough to compare this book and this market to get a benchmark.

Someone wants to know how the company can run a match funded book if it is borrowing so much in advance.

GECC says this is not a change in match funding, but it is inefficient from a return-on-investment standpoint. But from a liquidity perspective, it’s worth it.

Scott David at Morgan Stanley wants to know about GECC’s cost of capital.

According to management, it’s little changed from December 2, 2008, when they had the first GECC meeting. It’s at about 4.6%.

In response to a layoff question, GECC says they can’t give a headcount expectation for 2009. But the company does disclose that it laid off between 20,000 and 25,000 people worldwide last year.

The Goldman analyst wants to know about the leveraged loan book, which he says the company is carrying in the 90s whereas the market is pricing similar securities near the 70s.

GECC says it regularly goes in to value the portfolio, but doesn’t take write offs unless there is impairment.

Near the end, someone wants to know why the company didn’t just suspend the dividend altogether. Sure, you might end up overcapitalized, but in a world where he sees unemployment going to 10% (above GE’s assumption for their stress tests) he thinks this would be fine. Plus, he adds, the company is heavily reliant on government backing to roll and issue debt, and those programs could end. That’s a lot of uncertainty.

GECC said they didn’t cut because after looking at their capital position and the additional ways they can wring cash out of the company, they decided they didn’t need to slash the dividend altogether.

The first half of the presentation, led by chief financial officer Keith Sherin, was received well by investors who drove the stock up as much as 6%…

8:00am

People are already lining up at 30 Rock security for the GE Capital (GECC) discussion and the buzz is palpable. Thanks to the Wall Street meltdown, an investor presentation on loan loss provisions is now an electrifying event.

8:30am

A couple of pre-game thoughts from investors and analysts…

* This is going to play heavily to the fixed income guys rather than the equities people. Severe and sharp movements in yields and credit default swap spreads on GE bonds have driven stock performance. The stock can’t go higher until the credit markets believe in GE.

* We’ll hear a firehose of numbers, but there is a difference between data and meaningful data. We’re looking for real loan loss stress cases, and the market will be very disappointed if they get either weak stress cases or any signs of “just trust us, we know what we’re doing,” rather detailed explanations.

* For a long time the company didn’t want to talk about GECC or denied there were any problems. When the stock went down and GE was finally forced to open up about GECC, it only drove the price down more because we could see that there were potential issues. If they are truly transparent today, this could solve the spiral of worry, denial, stock price decline, management disclosure. This is the best case scenario.

* The major questions are whether they will be taking charge-offs on receivables, loans, and goodwill. We would like to hear about any capital raising plans. We will be listening for possible shifts in strategic direction such as reducing reliance on GECC.

* GE’s job is to manage expectations incrementally and minimize the rate of change in perceptions (to the downside) until the credit crunch and recession lift and we can actually know how to value this company. It could be several quarters before we really know where we stand with GECC.

9:00am

Introductions: Keith Sherin, CFO, Mike Neal, GE Capital CEO, and 15 members of the GE Capital leadership team.

There will be an hour at the end for questions, none throughout the presentation. Eyebrows shoot up…

Turns to Sherin.

9:02

Sherin: Reiterates that the “hot spots” will be covered and that the company has a strong liquidity position, completed 93% of debt funding through the year. There is enough capital to weather a lot of adverse cases, and even under these stress cases GECC will be profitable. There will be no need to raise external capital.

Says there is 6-1 leverage in GECC using the capital they raised last year. They raised cash balances. They have $60 billion in capacity with the government.

Ratings update: We’ve been working closely with the ratings agencies. Considers the AA+ with stable outlook from S&P a terrific outcome because the financial biz is clearly under stress.

Final word on GE’s commitment to GECC: GE must commit money to GECC if the finance arm doesn’t hit a target ratio. They have consistently put money into GECC to keep it adequately capitalized.

9:10

Mike Neal says GE is going to grind you through 174 pages of things you probably haven’t seen before.

Also reiterates that they’re here to be informative, rather than predictive.

Shows a chart from the Dec. 2 meeting reiterating that GE still has a cost advantage over other financial firms. As well as the GECC portfolio breakdown that most of the crowd has seen before.

Emphasizes that they avoid all of the most toxic securities/acronyms that have wreaked havoc on the market: CDS, CDOs or SIVs. No mezzanine or high yield bonds.

This is all important information, but for most investors they’ve seen it before – the breakdown of GECC’s segments and why they are great… why GECC is much more conservative than the typical bank. While this may be true, no one is saying GECC is the next Lehman. They just want to know if GECC is going to be an ongoing source of surprise earnings misses.

As one investor said: Nothing new so far, just the same: “All is well at GE, just trust us.”

9:20

They threw up a slide with the summary of their stress testing. Interestingly, it looks like in their worst case scenario (which utilizes Fed guidance…) U.S. unemployment will peak at 10.1% and GDP will decline by 3.3% for 2009. Unemployment last month hit a 25-year high of 8.1 percent and Michigan, which has the worst unemployment in the country, is already at 11.6%.

9:26

Kathy Cassidy, GE Treasurer, gives detail about the company debt and cash flow, as well as sources of alt funding. they won’t be going back to the market without government backing until the markets stabilize. The company is following the progress of other government programs with an eye toward how they can help the debt markets generally. The company continues to emphasize that they participated in government debt programs NOT because they had to, but because the government wanted them to… and because GE wanted to support those programs to support the debt markets generally.

She’s reiterating statements on capital ratios, liquidity, and debt that are a continuation of her Dec 2 remarks.

She says GE could use some of its $60 billion leftover from its TLGP line to pre-fund debt that will come due in 2010.

9:38

GE Capital chief risk officer Jim Colica again reiterates that we’re going to get a lot of detail today, though no new detail has come.

Getting back to the comments made by Mike Neal, he said GECC does not underwrite any credit default swaps. Since so many finance companies at least hedged their books with CDS, it is surprising that GECC avoided doing so. They didn’t underwrite, but did they buy CDS against bond defaults? Remember, doing so was considered a savvy and risk averse strategy before CDS became suspect. Would be an interesting question for the Q&A that will happen at the end of the session.

9:44

Colica’s been showing slides that show that the portfolio is diverse and that this should allow it to hold up under economic duress. But, as one analyst says, the stress test is presented as a conceptual process, not a rigorous scenario analysis of what would happen under truly adverse economic possible outcomes.

But it is good that in its stress testing, GE has not factored in the potential positive benefits from the stimulus program. This provides room for positive surprises in the book.

9:53

The commercial real estate team is up. This is the moment many have been waiting for. This is where we should get some detail. They key drivers in the stress case will be GDP (-3.3%), unemployment (peak 10.1%), and liquidity. It’s a $368 billion portfolio. The debt portfolio is $48 billion.

The division finances the purchases of real estate by third parties. They own and manage real estate, including office, apartment, warehouse, and retail buildings around the world. They provide financing to owner-occupied commercial real estate.

The head of the division (Ron Pressman?) says that in the sector “the pressure point will be centered on debt maturities in 2009 around the world,” adding that banks will be forced to extend or restructure loans, or even foreclose. All of this is putting pressure on values in the marketplace. He notes that value pressure varies around the world. In Tokyo and Paris GE sees 5.6% rental rate pressures; while in London and Madrid the company sees 20% plus. Values will be under downward pressure, which is why GE marked down the portfolio by 18% in the fourth quarter.

The $48 billion debt portfolio is primarily made up of senior secured first mortgage positions, which the company says is the strongest part of the capital structure.

They continue to emphasize their strong risk management.

10:21

Credit costs: The total debt portfolio has outperformed the industry overtime and they’ve historically had fewer charge-offs. The slide that shows this only goes back to 2005.

The company is emphasizing that reserves have been going up. It should be noted that critics have said GECC is still under-reserved, despite the increase. The company’s reserve model for this portfolio uses industry models.

10:25

Stress test for property valuation is up (3500 commercial tenants 8000 properties, 2600 cities). They look at the net operating income of all 8,000 properties (4800 underlie debt and 3200 underlie equity) to come up with recession cases for rents and occupancies. Here’s the slide for the stress case. Keep in mind, all stress tests use the Fed’s assumptions for GDP and unemployment.

10:34

Sorry for the break. Getting notes from GE asking us to reiterate that we’re listening to the presentation and watching the webcast with color coming at us from participants within the room. Point taken. Thanks! Other listeners, please feel free to comment or email me at kbenner@fortunemail.com

10:38

The company has noted that it bought 80% of its real-estate holdings with cash and has no mortgages. This is certainly a good thing. Matthew Kelley, a Sterne Agee bank analyst, wrote in a recent note that GE dove into the real estate market at the height of the boom. We’ll see after Q1 how GE accounts for the fall (if any) in values.

10:43

Here is a slide showing why GE’s unrealized loss is so small compared with real estate investment opportunity funds.

10:49

This slide breaks down their unrealized loss of $4 billion for 2008.
Even though alarm bells have interrupted the meeting, the stock is on a tear. Thanks to the morning performance, GE shares are up more than 6%.

12:58

They’re starting back up and are seating people after an impromptu break. Reuters’ take away from the top half of the presentation: in its stress case, General Electric expects $900 million in losses against loans at its GE Real Estate portfolio, representing an implied default rate of 8 percent. Assuming the Fed’s worst case for the economy, that number would rise to $1 billion, or an implied default rate of 10 percent. Its current default rate is 1.01%.

11:01

Meeting begins with joke that shortsellers called in the fire alarm and a couple of bomb threats. Funny? Um, sure…

Back to the loan losses summary…

It’s interesting to see the velocity of equity impairments.

11:10

Jumping back to the top of the session to Sherin’s remarks that GE Capital will be profitable. A reader reminds us that S&P, in its ratings outlooks, said that GE Capital would post “little or no profit or possibly a ‘modest net loss’ this year and next.” I checked in with S&P analyst Scott Sprinzen the other day, and he reiterated this comment noting 1) that S&P lowered its rating on GECC as a standalone entity from its last outlook. 2) That S&P does have a stable outlook on GE as a whole.

Blogger Peter Cohan writes. So who’s right — S&P or GE?

Cohan sums up investor sentiment well when he writes, “I hope that investors agree with Sherin that GECC will do far better than S&P expects. If so, GE stock may have further to rise. But if GECC offers unpleasant surprises later this year after a $5 billion profit forecast, the credibility of management could be shot.”

11:20

Commercial lending and leasing is up. It’s the largest portion of the asset base. About half is equipment lending and leasing, 17% is leveraged loans, 13% is asset based leasing. Here’s the breakdown.

Detail on the lending book: Most of the book is in senior secured debt, which is a theme running through the presentation. This is one way to think about the book: the division only lends 59 cents against every dollar of recoverable assets. They also provide numbers on their leveraged loan book and equipment leases and loans.

11:33

The equipment residual values: aircraft and fleet cars make up over 60% of the collateral. They’re seeing losses in fleet (in keeping with the economy and peers). and they going to work to mitigate that loss. They have about $1 billion in exposure to the big 3 automakers. Could have potential loss in the $80 million to $150 million range.

11:41

This is the stress test summary for the division; for its large “Americas equipment” segment that has been under duress; and for leveraged loans.

11:44

The restaurant franchise book. This has been another area of weakness and the company puts up a stress case slide for this area, too. Not as much detail for these stress cases, likely because there’s a ton of info to go through.

11:46

Time to go through GECAS, has always been a bright spot for the company, the division that takes care of leasing, financing, and servicing for commercial aircraft with 230 customers in over 70 countries.
Thanks to the recession, a decline in global traffic, and a glut of orders in the past few years, GECAS could be a point of weakness for the company. GECAS execs anticipated this, they say, at the end of 2006 when they “weren’t aware of the words subprime” or the impact that the housing crisis would have on the economy.
They do a good job of going through how historically the unit has weathered downturns in the industry and that they’ve recently been cautious in this segment, giving, as with the other divisions, a slide with their stress case.
But some say questions remain. The past downturns for this division were cyclical problems in the airline industry itself. We’re seeing some of this now, and also seeing intermediaries, the leasing companies, feeling pain due to the credit markets.
They do say they’ll be aggressive with distressed accounts, litigating when necessary.
12:05
Intermission. I’ve been getting some good emails. Please send over more thoughts to kbenner@fortunemail.com

What do you think of the corporations on Fortune’s Most Admired Companies for financial soundness list? Have you worked for any of these companies, or bought their products or services? Which — if any — companies to you admire most for their financial strength? Tell us what you think. The best replies will be published here, and possibly in a future story on CNNMoney.com.

What do you think of the top employers that are hiring most? Would you want to work for one of them? Is your company hiring? Are you looking for a new job? Tell us what you think.

By now the headlines already will have covered the basics. Google’s (GOOG) fourth-quarter revenues were up 18% to $5.7 billion, a solid showing. Profits fell, but only because Google wrote down loser investments in AOL, a unit of Fortune parent Time Warner (TWX), and Clearwire, the Wimax company that’s also an embarrassment to Motorola  and Intel (INTC). On a day that Microsoft’s (MSFT) stock tanked by 12%, once again Google comes up smelling like roses. Not super fragrant roses. But roses all the same.

Google believes it is doing well because scarce advertising dollars continue to flow to search and because it keeps improving its search engine. (Google made 300-plus  search-quality improvements during 2008, says the company’s product pooh-bah Jonathan Rosenberg.) Microsoft, in comparison, can’t shoot straight online. Earlier in the day the company reported that its online unit’s operating loss had doubled to $471 million on flat revenue.

Google’s got almost $16 billion in cash now, compared with $28 billion for Apple (AAPL) and about $21 billion for Microsoft (which has given back oodles to its shareholders in the form of special dividends). Google ended the year with 20, 222 employees (one of whom is my wife), up about 100 people from the previous quarter. That’s a sea change for the company that previously couldn’t recruit people fast enough. (Larry Page, who likes to review every hire, must be at least a little relieved by this.)

If there was anything at all notable about Google’s results and comments to investors during an end-of-day conference call, it is the curious prudence that has crept into its collective voice. Google always used to say it was careful about costs and thoughtful about how it managed its resources. That was well understood to be code language for: “We spend willy nilly — wouldn’t you? — and we’re willing to try just about anything. Our core business is that good.”

Things have changed a bit. Credit this with new CFO Patrick Pichette, who has been at Google only six months and is carefully deciding where — and where not — to push. You can hear the tension in his own conflicting statements. “We have a lot of flexibility within our model,” he said Wednesday, meaning Google easily can cut more costs when it wants or needs to. And then, “We are managing this business for the long term. The mindset of the company is a growth company.” That latter comment signals Google will continue to invest and spend on things that may never see a return, just as powerful risk-taking concerns should — despite the professed commitment to prudence.

So where does the more measured behavior manifest itself? I’ve already noted the hiring halt. Capital expenditures declined 19% from the third quarter to $368 million. This is a huge deal in Googledom as capex goes primarily to data centers and other hardware that make the Google search engine hum.

One last item of note. Google is offering employees the opportunity to exchange underwater stock options for newly priced options due to the stock price having been hammered. (The only catch in the exchange is that employees will have to wait an additional 12 months before selling re-priced options.) The stock price is  currently around $300, compared with $700 in late 2007. The number of shares eligible for exchange is about 3% of the shares outstanding, and the exchange will result in a charge to earnings of $460 million over a five-year period.

One must re-phrase this last bit in English: Google is transferring almost half a billion dollars in wealth from shareholders to employees, and for what ….? Motivation and retention, says Google. This a well known farce, as old as the Valley, which tells itself first that it offers generous stock options as a form of incentive and then, when share prices plummet, moves the ball so its employees, whose incentives apparently didn’t work (as if the stock price were under their control) can be re-incentivized. Retention? Would someone please tell me where the average Google employee is going to go right now?

In conclusion, and as the headline says, Google is in good shape. Not fantastic. But plenty damn good. It’s also becoming more and more like other technology companies in so many ways.

There was a magical moment that had nothing to do with financial results Wednesday afternoon in Apple’s (AAPL) conference call with investors. What made the magic remarkable is that it came from Tim Cook, the supposedly uncharismatic, unemotional, uninspiring chief operating officer of the company, the guy whom Steve Jobs tapped to run day-to-day operations during his medical leave of absence, even though Cook already runs the company’s operations.

Asked the inevitable first question about how the company would function without Jobs, Cook let loose the following, courtesy of Seekingalpha.com, a monologue I’m labeling the Cook Doctrine, that he appeared to deliver extemporaneously:

We believe that we are on the face of the earth to make great products and that’s not changing. We are constantly focusing on innovating. We believe in the simple not the complex. We believe that we need to own and control the primary technologies behind the products that we make, and participate only in markets where we can make a significant contribution. We believe in saying no to thousands of projects, so that we can really focus on the few that are truly important and meaningful to us. We believe in deep collaboration and cross-pollination of our groups, which allow us to innovate in a way that others cannot. And frankly, we don’t settle for anything less than excellence in every group in the company, and we have the self-honesty to admit when we’re wrong and the courage to change. And I think regardless of who is in what job those values are so embedded in this company that Apple will do extremely well.

This is fascinating at a number of levels. Some of it is stuff you’d expect from anyone in Apple’s senior management. Some ideas have been articulated at Apple for years. But this shows an executive who has given tons of thought to what it means to lead Apple. He couldn’t have been clearer that he’s in charge, at least for now. It also was a show of strength, as when Cook later threatened Palm (PALM) with patent litigation.

It raised so many questions too. Other than the company’s proprietary operating systems, what technologies was Cook referring to? What are some projects Apple has considered and rejected? When has the company been wrong — and been “self-honest” about it? What’s an example of the culture being so embedded that things work, even when Jobs isn’t involved?

There is so much to learn about Apple that frankly has been obscured for so long by the cult of personality around Steve Jobs. As Cook said before beginning his series of “We believes,” it’s a place with a deep bench. Yet few have heard of the supporting cast memebers, in part for fear of their being poached, in part because its always been all about Steve.

What’s clear is that Apple’s current leader — whom I’ve admittedly spent a lot of time thinking about – is eloquent, forceful and passionate about Apple. He may be a just-the-facts operations wonk with little experience in design, marketing for products. But he’s clearly so much more as well.

Pattie Sellers and I are having a debate about board memberships. She intelligently argues that boards are good, especially for women, who have a disadvantage at the highest reaches of corporate America.

Still, you’ll know Carol Bartz, the incoming CEO of Yahoo (YHOO), is super serious about her massive task at hand if she immediately drops off the boards of Cisco (CSCO), where’s she’s the lead independent director; Intel (INTC) a board post she awkwardly shares with outgoing Yahoo President Sue Decker; and NetApp (NTAP).

I totally get that outside boards help the individual as well as, at least a little, their company. However, when you’re in crisis mode, which is what Bartz’s situation at Yahoo will be, there’s simply no time for anything else. There’s no room for a single 200-hour-a-year commitment other than the one company where you’re the chief executive.  (Never mind a personal life; that’s another story.) When the crisis passes, that’s a good time to join an outside board. (It took HP’s (HPQ) Mark Hurd three years before he joined the board of News Corp., for example.)

There’s no right answer to this question. It’s all opinion. And Pattie already is reporting that Bartz will exit the Intel and NetApp boards. Were she to drop Cisco too, I’d argue for boosting her odds of success at Yahoo exponentially.

Just before the new year a Silicon Valley financial type pointed out to me that August Capital, an old-line but quiet venture firm, had invested twice in disc-drive leader Seagate (STX), once as a venture investment and again alongside Silver Lake and TPG in a going-private transaction in 2000. “Who knows,” this investor quipped, noting Seagate’s plummeting stock price, then and now below $5 per share, “maybe August will get another chance.” (August’s co-founder, David Marquardt, is on Seagate’s board.)

Seagate this week dumped its mouthy CEO, Bill Watkins, whom Jeff O’Brien describes nicely here. If you don’t follow the drive business carefully you don’t know who’s up and who’s down. Apparently, Western Digital (WDC), which I profiled at least one complete cycle ago, is up, and Seagate is down. A Seagate spokesman gave O’Brien an unusually clear answer as to why Watkins got the boot, explaining that “everyone here is focused on fixing the execution issues and regaining the technology leadership that we let slip. That means improving time to market, [and] getting the customers the right products at the right time. It’s been apparent that we’ve let that slip, and we’ve got to get that back.” That’s industry code for: The competition released faster, better products more quickly than we did, causing us to lose share and profitability.

So would Seagate go private again? It’s worth less than half  its 2002 IPO price and a sixth of its post-IPO peak. Former and now new CEO Steve Luczo is a congenital investment banker who loves to do deals. Then again, a new LBO would be problematic. First, there’s little leverage (debt) to be had right now.  Second, the 2000 deal was unique because Seagate owned a weirdly highly valued stake in Veritas, now owned by Symantec (SYMC). Third, the drive business itself faces a crisis in the substitution of flash memory in devices that use hard drives, like music players.

But good luck, Steve. Really.

Some other thoughts on the week so far …

* At the risk of piling on a departing executive who ought to have been shown the door a ways back, I had a different reaction to what Pattie Sellers refers to as outgoing Yahoo (YHOO) President Sue Decker’s “breadth of experience” and “impressive resume.” Sellers notes that Decker is on the boards of Berkshire Hathaway, Intel and Costco.  My thought on being reminded of that? How the hell did someone in a grueling and overwhelming job and who happens to have a punishing commute to work maintain memberships on the boards of three such significant companies? Here’s another question: Why did the board tolerate Decker’s willingness to be even the slightest bit distracted for so long?

* David Swensen, the legendary head of the Yale endowment, sort of answered the question I raised this week about endowments, in an interview with the Wall Street Journal Tuesday. Asked if his lousy performance in 2008 would cause him to alter his approach, he said: “I don’t think it makes sense for an institutional investor with as long an investment horizon as Yale’s to structure a portfolio to perform well in a period of financial crisis. That would require moving away from equity-oriented investments that have served institutions with long time horizons well.” The introduction to the article notes, however, that Yale will cut its operating budget as a result of the performance of its endowment. Swensen’s the genius. But I don’t care how long your time horizon is if your failure to protect near-term earmarked money causes your single client to cut its near-term spending.

* Kudos to First Round Capital, the pioneering angel/VC firm that specializes — like many, many other new firms — in smallish investments in truly early-stage companies, for hosting its “CEO summit” in an inexpensive venue:  meeting rooms at a community center on the Mission Bay campus of the University of California at San Francisco. No, I wasn’t invited to the meeting. It just so happens that First Round’s welcome table was set up right outside the UCSF gym, where I worked out Tuesday morning. The foyer was lousy with late thirtysomethingish men dressed in sport coats, blue jeans and lots of hair product. The VC business may be freaking out, but you wouldn’t know from observing the breakfast chatter among frugal First Round’s CEOs.

To start the week off, here are a few things that jumped out at me over the weekend.

* In a New York Times review of a new biography of William Randolph Hearst was this startling fact: In the 1890s, when Hearst relocated to New York from San Francisco, his new city was home to 48 daily papers. Reviewer and veteran newsman Jack Rosenthal calls this period “print’s riotous spring, a different transformative time for newspapers.” It’s a nice turn of phrase, and the period certainly stands in stark contrast to the bleak, Google (GOOG)-dominated period I’ve been describing.

* The Times also reported that last seaon’s two-night premier of American Idol on News Corp.’s (NWS) Fox network attracted an average of 33.3 million viewers, its worst debut since the fourth season, “down 6 percent from the previous season, according to Fox, though,” – and here the emphasis is mine - “‘Idol’ remained the highest-rated series on network television.” Any other program on television gladly would suffer through an audience of 33.3 million viewers.

* ExxonMobil (XOM) CEO Rex Tillerson last week advocated a carbon tax rather than a regulated carbon trading regime in the United States. The commentariat quickly said a carbon tax isn’t politically possible and some, like Fortune partner Breakingviews.com, accused Tillerson of (cleverly and productively) pandering to the incoming administration. The notion of a carbon tax first came to my attention at the Fortune 500 Forum last month, where FedEx (FDX) legend Fred Smith and Marvin Odum, U.S. chief of Shell (RDSB), supported it. Given all the problems with carbon trading, and despite that Congress isn’t paying attention to it, my instincts tell me it’s probably a good idea to pursue.

* Palm (PALM) introduced a new phone, and its stock popped 91% on the week. Two facts from Palm jumped out at me: the phone is due out in the “first half of 2009″ and “pricing for the phone has not yet been determined.” Long articles could be written on what it means that Palm and partner Sprint don’t yet know when they’ll actually deliver the product or how much it will cost. I’m comfortable predicting this volatile stock will remain volatile.

* Last thing. Loads of endowments, the latest being Princeton University’s, are announcing that investment losses will lead to decreased funding to their university’s operating budgets. Last week the head of a philanthropy told me his budget will take a hit as donors stretch out the payments of promised grants. This is pathetic and shocking on so many levels. If you’ve promised to give someone money in the next year or so, wouldn’t you make sure that money was invested conservatively, like in cash or Treasuries? That’s essentially how my toddler’s 529 plan works with Vanguard: As she approaches college age Vanguard automatically will shift my investments for her into ultra-safe places. Why on earth wasn’t Princeton – and donors to the philanthropy – doing this with promised money? Again, articles – no, books – could be written.

Have a nice week.

There’s been so much online discussion about the interview I did with Google’s (GOOG) Eric Schmidt on this subject that I thought I’d post a few more thoughts. (John Battelle snarkily notes that all the discussion has been online … that’s, of course, just the discussion you’re seeing, John, which isn’t the same thing as all the discussion; most people haven’t even seen a print copy of that issue of Fortune yet, but that’s another story.)

Immediately after this piece ran I had an interesting conversation with an astute observer of this stuff, who raised a good point. Is the right question, can newspapers be saved? Or is it, can the print editions of papers be saved? I think it’s clear now that only the first question is relevant. The distribution method shouldn’t matter. If print has to die or be seriously scaled back, so be it, though I think the online-only crowd does itself a disservice. There’s simply no way to re-create the serendipitous experience of reading a newspaper online.  If you don’t read a paper, you will miss things. Period. (I know a print organization that is in the process of eliminating paid print subscriptions; that’s sad, but I digress.)  The more important thing is saving the journalism that goes into it. And I fear that in the interim period between now, when online doesn’t begin to pay for news gathering, and later, when somebody figures out the business model, irreparable damage will get done to the trade. With respect, young people who get their training at your typical blog (of course there will be exceptions) aren’t going to learn how to be journalists.

It’s a sad state of affairs, and Battelle is right to compare it to the auto industry, something Jack Welch also does in a TV show on Fox News he and I appear on this Saturday morning.

President-elect Obama’s first speech since the election won’t likely be remembered much by history, especially compared with his upcoming inaugural address. Nevertheless, it was an important moment because it marked the beginning of his new campaign, to sell a massive stimulus plan he hopes will make 2009 the low point for the American economy rather than merely the second year of a more prolonged slump. Here are a few things that jumped out at me as he spoke at George Mason University on Thursday morning.

1. It will be good to have a president who uses moderately big words. I loved the expression “paradox and the promise of this moment” referring to a time when so many are out of work and yet there’s so much work to be done.  Maybe paradox isn’t such a toughie, but merely having a leader with oratorical ambition will be a joy for a nation used to being talked to like fourth graders.

2. Obama’s overarching economic themes aren’t so very different from Bush’s. Obama plans to embrace tax cuts, stimulus and even entitlement reform, something he explicitly said in a late debate would have to wait until his second term. These are all themes the current president pursued, some more successfully than others. Obama is showing his pragmatic streak in other areas as well, as John Heilemann recently noted in New York Magazine with regard to Obama’s indicated foreign policy.

3. I wish Obama wouldn’t have said that “our government already has spent a good deal of money” on the recovery. By stressing spending he missed an opportunity to point out that so far what Washington has done most of is lending. The spending essentially starts now, and by drawing this distinction he would have helped his cause.

4. I’m all for transparency, but I fear Obama’s faith in posting government spending online is misplaced. Reporters and other watchdogs have been calling out bridges-to-nowhere for years. Politicians are like used-car salesmen, with apologies to used-car salesmen: extremely difficult to shame or embarrass.

5. Having said that, Obama’s distinction between earmarks and pork as business as usual and what he expects in this legislation was intriguing. When he said, “I understand that every member of Congress has ideas on how to spend money. Many of these projects are worthy, and benefit local communities. But this emergency legislation must not be the vehicle for those aspirations,” he seemed to be acknowledging that it’s folly to think we can eradicate the ways of Washington. Will members of Congress honor his request to refrain from politicking  for a bit? Don’t count on it.

Obama isn’t perfect, but he’s off to a good start. I’m encouraged.

You’ve seen our picks for the Dumbest Moments in Business in 2008. Tell us which blunder you think was the dumbest of all – or, better yet, a moment you think we missed. Post a comment below.

A couple years ago, right around the time Dell’s exploding laptop batteries were getting a fair amount of media attention, I had breakfast in San Francisco with a senior Dell executive. He was seriously annoyed by all the focus on Dell (DELL), even though his company wasn’t the only one with the spontaneous combustion problem caused by Sony’s (SNE) batteries.

I used, with little success, an explanation I like to give subjects trying to understand their media coverage. It revolves around a key scene in the fabulous Ron Howard movie “The Paper” in which a tortured city hall official pleads with a columnist to know why the latter is targeting the former in his columns. “You don’t get it, do you,” replies the news man.  “It’s your turn.”

My point then was that Dell, which had been among the smuggest of successful companies — ‘Our business model is our innovation’ … Michael Dell saying in 1997 that if he ran Apple (AAPL) he’d “shut it down and give the money back to the shareholders” — was about to experience the reverse of adulation. When you brag on the way up your critics will gloat on the way down. The mistake is to think the media takes sides. Not really. It joins in the praise as well as the scorn.

Anyway, fast forward to 2008, and it’s interesting to see just how defensive and downright snippy Dell has become, having been humbled by the likes of once lowly Apple and the former PC industry doormat, Hewlett-Packard (HPQ). Michael Dell, the current and former CEO, clearly picked the wrong reporter to get his back up with when he told Ashlee Vance of the New York Times, “I don’t appreciate the tone of your reference,” in response to a question about Dell’s culture. (My only quibble with Vance’s article is that it doesn’t explain why acquisitions are necessary for Dell. I don’t doubt that they are. I’d just like to have had it explained to me.)

More recently, Dell has been publicly suggesting that it’s greener than Apple, using the kind of intemperate and schoolyard-like taunting one typically doesn’t see from Fortune 500 companies. (Read John Paczkowski’s spot-on overview, titled, “Dell Green, All Right — Green With Envy.”)

It’s easy to understand why Dell (the person and the company) are so sensitive. Its once world-beating stock trades where it did about 11 years ago. Its management has largely turned over. Its reputation lags the competition.

Will Dell have its turn to shine again? Most likely. First, though, it’ll  have to lose the attitude. Then, when it starts to succeed again the ‘Dell is Back!’ stories will appear.

And the cycle will begin anew.

Facebook held a holiday party Monday night for journalists at its headquarters in rainy, cold Palo Alto. The conversations there were strictly off the record, so I can’t quote what people told me over egg nog and finger food.

I’ll share a few thoughts anyway because Facebook’s an interesting company that’s in the news a lot. First, it has acquired interesting DNA. Much has been made of how young and inexperienced CEO Mark Zuckerberg is. (The young-and-inexperienced one has become totally adequate at making small talk at cocktail parties, by the way.) I can’t tell you what Zuckerberg said to me, but I can tell you he’s pleased that Facebook is getting easier to use; he’s jazzed by the company’s new deal with IAC’s (IACI) CitySearch that makes it easy for people to share info with their “friends” about places to go and things to do; and he talks about the news biz with pal/mentor/new board member Don Graham of Washington Post Co. (WPO).

But I digress. Facebook has pulled in nearly grey-haired talent from places like Google (GOOG), Amazon (AMZN) and eBay (EBAY). They’re the kinds of people who’ve seen what works and what doesn’t in the tech business. Without saying which exiles from those companies I talked to, I’ll mention one I didn’t: Gideon Yu, the former YouTube/Google executive who’s currently Facebook’s chief financial officer. Where were you Gideon?

What else? Various Facebookers pooh-poohed the recent ruckus over its inability to sell employee shares at their anticipated valuation. Whose stock hasn’t gotten hammered, after all, goes the argument.  (A more effective way of downplaying such stories would be to discuss it with me on the record. I’m just saying.)

Someone familiar with her thinking reports that Chief Operating Officer Sheryl Sandberg, the former chief of staff to incoming Obama economic advisor (and former Treasury secretary) Larry Summers, isn’t sorry she’s not going to Washington. Sandberg isn’t a banking expert anyway, and that’s the kind of expertise that’s called for right now.

Facebook also is smart about its journalist schwag. It distributed two party favors to journos on their way out the door: A $100 gift card from DonorsChoose.org that allows its holder to donate the money to any school of their choice. I love that. The second is a little bag that looks like a compact-disc holder that unzips and unfolds into one of those crunchy granola bags people bring with them to the supermarket. Also smart. My wife will LOVE that.

Oh, one last thing. I’m beginning to crumble on my well-documented aversion to Facebook. It’s probably all my old pals from Kroehler YMCA Camp who have friended me lately that have caused me to reconsider. But that’s a story for another day.