Showing posts with label GE. Show all posts
Showing posts with label GE. Show all posts
Monday, March 2, 2009
GE Cuts Dividend
FAIRFIELD, Conn.--(BUSINESS WIRE)--The Board of Directors of General Electric Company (NYSE:GE) today authorized a plan to reduce the Company’s quarterly dividend to $0.10 from $0.31 per outstanding share of the Company's common stock, effective for the second half of 2009. This decision will preserve approximately $9 billion for the Company on an annualized basis.
Tuesday, February 10, 2009
GE Declares Quarterly Dividend
GE Board of Directors Authorizes Regular Quarterly Dividend
Friday, February 06, 2009, 2:54:00 PM
FAIRFIELD, Conn.--(BUSINESS WIRE)--The Board of Directors of General Electric Company (NYSE:GE) today authorized a regular quarterly dividend of $0.31 per outstanding share of the Company’s common stock. The dividend is payable April 27, 2009, to shareowners of record at the close of business on February 23, 2009. The ex-dividend date is February 19, 2009. This dividend payment will complete the dividend for the first half of 2009.
Friday, February 06, 2009, 2:54:00 PM
FAIRFIELD, Conn.--(BUSINESS WIRE)--The Board of Directors of General Electric Company (NYSE:GE) today authorized a regular quarterly dividend of $0.31 per outstanding share of the Company’s common stock. The dividend is payable April 27, 2009, to shareowners of record at the close of business on February 23, 2009. The ex-dividend date is February 19, 2009. This dividend payment will complete the dividend for the first half of 2009.
Wednesday, January 28, 2009
Possible Downgrade For GE
FAIRFIELD, Conn.--(BUSINESS WIRE)
Moody’s informed us today it has placed General Electric Company's and General Electric Capital Corporation's (GECC) long-term Aaa ratings on review for possible downgrade. This review does not affect GE’s and GECC’s short-term funding ratings of Prime-1 (P-1), which were affirmed by Moody's. This action is a follow-up to Moody’s December review of GE’s 2009 operating plan. GE has outlined a plan for the year that is based on the difficult global economic environment we see. During the next few months, we will work constructively with Moody’s on its review. Our objective is to maintain our Triple-A rating but we do not anticipate any major operational impacts should that change. We expect to deliver on the 2009 financial framework that we outlined last week.
Moody’s informed us today it has placed General Electric Company's and General Electric Capital Corporation's (GECC) long-term Aaa ratings on review for possible downgrade. This review does not affect GE’s and GECC’s short-term funding ratings of Prime-1 (P-1), which were affirmed by Moody's. This action is a follow-up to Moody’s December review of GE’s 2009 operating plan. GE has outlined a plan for the year that is based on the difficult global economic environment we see. During the next few months, we will work constructively with Moody’s on its review. Our objective is to maintain our Triple-A rating but we do not anticipate any major operational impacts should that change. We expect to deliver on the 2009 financial framework that we outlined last week.
Friday, January 23, 2009
GE 4th Quarter 2008 Earnings Inline
GE Earned $18.1B in ‘08;
4Q ‘08 Results in Line with December Outlook;
Industrial CFOA of $16.7B up 5%;
Cash on Balance Sheet Grew from $16B in 3Q to $48B at YE;
No Change to Plan for $1.24 Dividend, ‘09 Framework,
and Running Company to be Triple-A
Fairfield, Conn., Jan. 23, 2009 – GE announced today fourth-quarter 2008 earnings from continuing operations of $3.9 billion, or $.37 per share before preferred dividend, or $.36 per share attributable to common shareowners. Results included $1.5 billion of after-tax restructuring and other charges, including increased reserves in current environment, which are above the Company’s original plan and the restructuring will lower costs for 2009 and beyond.
4Q and FY 2008 Highlights (Continuing Operations)
4Q earnings per share (EPS) of $.37 before preferred dividend (including charges), or $.36 attributable to common shareowners (including charges); 4Q earnings of $3.9 billion
Full-year (FY) EPS of $1.79 before preferred dividend, or $1.78 attributable to common shareowners; FY earnings of $18.1 billion
Infrastructure and Media earnings up 3% in 4Q and 10% for year
Capital Finance earned $1 billion in 4Q and $8.6 billion for year
4Q revenues of $46.2 billion, impacted by stronger U.S. dollar and business exits; FY revenues of $183 billion, up 6%; FY Industrial organic revenue growth of 8%; global revenue growth of 13%
Recorded $1.5 billion of restructuring, including increased reserves in current environment, versus guidance of up to $1.4 billion
Through today, achieved 64% of 2009 long-term debt goal; commercial paper of $72 billion at yearend, a decrease of $29 billion year-over-year
Infrastructure 4Q orders declined 6%; Total equipment and services backlog grew to $172 billion, up 9%
Fairfield, Conn., Jan. 23, 2009 – GE announced today fourth-quarter 2008 earnings from continuing operations of $3.9 billion, or $.37 per share before preferred dividend, or $.36 per share attributable to common shareowners. Results included $1.5 billion of after-tax restructuring and other charges, including increased reserves in current environment, which are above the Company’s original plan and the restructuring will lower costs for 2009 and beyond.
For the year, revenue was $183 billion, up 6%, and earnings were $18.1 billion, down 19%. This was the third highest earnings year in GE history.
“In a very tough environment, we delivered fourth quarter business results in line with expectations we provided in December,” Chairman and CEO Jeff Immelt said. “We grew Infrastructure and Media by 3% in the quarter and 10% for the year. Energy Infrastructure led the way in the quarter with 11% segment profit growth driven by continued global demand. Technology Infrastructure grew earnings by 1%, led by 21% growth in Aviation. NBC Universal segment profits declined 6% in fourth quarter as strong cable earnings were offset by declines in the local stations.
“Capital Finance earned $1 billion in the quarter and $8.6 billion for the year,” Immelt said. “We had several negative impacts to earnings in the quarter including increased loss reserves, negative marks and impairments. These charges, along with global benefits, generated a tax credit that more than offset our pre-tax loss. We also originated $48 billion of new assets in the quarter at solid margins. “We run the company to have a Triple-A credit rating, and we have significantly strengthened our liquidity position,” Immelt said. “We generated $16.7 billion of industrial cash flow from operations, up 5%. We ended the year with $48 billion in total cash, after paying down our commercial paper balance to $72 billion from $88 billion at the third quarter. We used $5.5 billion of our equity offering to meet our stated GE Capital debt-to-equity leverage goal of 7:1 by the end of 2008. Through today, we have been able to fund $29 billion of our $45 billion long-term debt needs for 2009. “The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year. We believe the GE dividend provides our investors with a solid return in this uncertain time,” Immelt said.
4Q ‘08 Results in Line with December Outlook;
Industrial CFOA of $16.7B up 5%;
Cash on Balance Sheet Grew from $16B in 3Q to $48B at YE;
No Change to Plan for $1.24 Dividend, ‘09 Framework,
and Running Company to be Triple-A
Fairfield, Conn., Jan. 23, 2009 – GE announced today fourth-quarter 2008 earnings from continuing operations of $3.9 billion, or $.37 per share before preferred dividend, or $.36 per share attributable to common shareowners. Results included $1.5 billion of after-tax restructuring and other charges, including increased reserves in current environment, which are above the Company’s original plan and the restructuring will lower costs for 2009 and beyond.
4Q and FY 2008 Highlights (Continuing Operations)
4Q earnings per share (EPS) of $.37 before preferred dividend (including charges), or $.36 attributable to common shareowners (including charges); 4Q earnings of $3.9 billion
Full-year (FY) EPS of $1.79 before preferred dividend, or $1.78 attributable to common shareowners; FY earnings of $18.1 billion
Infrastructure and Media earnings up 3% in 4Q and 10% for year
Capital Finance earned $1 billion in 4Q and $8.6 billion for year
4Q revenues of $46.2 billion, impacted by stronger U.S. dollar and business exits; FY revenues of $183 billion, up 6%; FY Industrial organic revenue growth of 8%; global revenue growth of 13%
Recorded $1.5 billion of restructuring, including increased reserves in current environment, versus guidance of up to $1.4 billion
Through today, achieved 64% of 2009 long-term debt goal; commercial paper of $72 billion at yearend, a decrease of $29 billion year-over-year
Infrastructure 4Q orders declined 6%; Total equipment and services backlog grew to $172 billion, up 9%
Fairfield, Conn., Jan. 23, 2009 – GE announced today fourth-quarter 2008 earnings from continuing operations of $3.9 billion, or $.37 per share before preferred dividend, or $.36 per share attributable to common shareowners. Results included $1.5 billion of after-tax restructuring and other charges, including increased reserves in current environment, which are above the Company’s original plan and the restructuring will lower costs for 2009 and beyond.
For the year, revenue was $183 billion, up 6%, and earnings were $18.1 billion, down 19%. This was the third highest earnings year in GE history.
“In a very tough environment, we delivered fourth quarter business results in line with expectations we provided in December,” Chairman and CEO Jeff Immelt said. “We grew Infrastructure and Media by 3% in the quarter and 10% for the year. Energy Infrastructure led the way in the quarter with 11% segment profit growth driven by continued global demand. Technology Infrastructure grew earnings by 1%, led by 21% growth in Aviation. NBC Universal segment profits declined 6% in fourth quarter as strong cable earnings were offset by declines in the local stations.
“Capital Finance earned $1 billion in the quarter and $8.6 billion for the year,” Immelt said. “We had several negative impacts to earnings in the quarter including increased loss reserves, negative marks and impairments. These charges, along with global benefits, generated a tax credit that more than offset our pre-tax loss. We also originated $48 billion of new assets in the quarter at solid margins. “We run the company to have a Triple-A credit rating, and we have significantly strengthened our liquidity position,” Immelt said. “We generated $16.7 billion of industrial cash flow from operations, up 5%. We ended the year with $48 billion in total cash, after paying down our commercial paper balance to $72 billion from $88 billion at the third quarter. We used $5.5 billion of our equity offering to meet our stated GE Capital debt-to-equity leverage goal of 7:1 by the end of 2008. Through today, we have been able to fund $29 billion of our $45 billion long-term debt needs for 2009. “The first quarter dividend is done, and we are committed to our plan for $1.24 per share for the year. We believe the GE dividend provides our investors with a solid return in this uncertain time,” Immelt said.
Monday, January 5, 2009
GE Collaborates With Turkey
GE Transportation and Tülomsaş Combine Expertise To Supply Markets with GE’s PowerHaul™ Series Locomotives
GE Transportation, a unit of General Electric Company (NYSE: GE), and Tülomsaş have announced the signing of a Memorandum of Understanding (MOU) for a strategic relationship in which GE Transportation and Tülomsaş have agreed to collaborate to supply the market with GE’s PowerHaul™ locomotives.
Under the terms of the agreement, GE will supply Tülomsaş with the necessary technology and material to assemble GE’s PowerHaul series locomotives in Turkey for the European, Middle East and North African markets. "Our strategic approach is to bring to the market advanced technology from GE, a world leader in diesel electric locomotives, with Tülomsaş’s manufacturing expertise, while remaining a productive, profitable and competitive enterprise,” said Hayri Avci, General Director and Chairman of Board of Directors of Tülomsaş,. “Our strategic relationship with GE will be beneficial to both companies and help Tülomsaş expand its footprint and increase its technological prowess and profitability. This relationship brings two companies together, each of which has over 100 years of locomotive manufacturing experience.” “GE Transportation is committed to growth by focusing on technical leadership, deep enduring customer relationships and global competitiveness,” said Lorenzo Simonelli, President and CEO of GE Transportation. “We are very pleased to be working with Tülomsaş on this MOU as it is a natural step along the path to regional localization of our capabilities.” Added Simonelli: “We're investing in Turkey because of its strategic proximity to the customers we wish to serve and its advanced technology and manufacturing skills. Finally, we hope to leverage GE’s longstanding expertise and global reach to be a true partner in the economic development of the country. “ GE’s PowerHaul series locomotives are driven by the 16-cylinder PowerHaul engine, which is GE’s most technologically advanced locomotive engine to-date. This new engine combined with other technologies from GE is projected to reduce PowerHaul Locomotive fuel use by up to 9% compared to current operating fleet averages. The 3,700 GHP engine is European Stage IIIa compliant and Ecomagination certified. Ecomagination is a GE-wide commitment to developing technology designed to help GE customers satisfy environmental challenges, while maximizing performance and reducing cost. GE Transportation’s PowerHaul Locomotive is based on the company’s global Evolution® Series locomotive platform introduced in 2005. With close to 3,000 units in use today, the Evolution Series locomotive is one of GE Transportation’s best-selling products worldwide. “The PowerHaul engine used in these locomotives significantly increases fuel efficiency while lowering emissions, said Simonelli. “PowerHaul Locomotives are designed for cost-effective long-haul operating range, high pulling power, long-term emissions compliance and reduced life-cycle cost.” GE Transportation received an order for 30 locomotives, powered by GE’s PowerHaul engine, from UK-based Freightliner Group Ltd. in November 2007. The purchase represented the largest order of freight locomotives in Freightliner’s history and the PowerHaul engine’s debut into the UK and European market place. More than 16,500 GE locomotives are currently in use in more than 50 countries around the world. GE Transportation has evolved from a supplier to the North American rail industry to a global transportation leader. Through the end of 2008, international locomotive orders will contribute more than 40% of the company’s locomotive-related revenue.
GE Transportation, a unit of General Electric Company (NYSE: GE), and Tülomsaş have announced the signing of a Memorandum of Understanding (MOU) for a strategic relationship in which GE Transportation and Tülomsaş have agreed to collaborate to supply the market with GE’s PowerHaul™ locomotives.
Under the terms of the agreement, GE will supply Tülomsaş with the necessary technology and material to assemble GE’s PowerHaul series locomotives in Turkey for the European, Middle East and North African markets. "Our strategic approach is to bring to the market advanced technology from GE, a world leader in diesel electric locomotives, with Tülomsaş’s manufacturing expertise, while remaining a productive, profitable and competitive enterprise,” said Hayri Avci, General Director and Chairman of Board of Directors of Tülomsaş,. “Our strategic relationship with GE will be beneficial to both companies and help Tülomsaş expand its footprint and increase its technological prowess and profitability. This relationship brings two companies together, each of which has over 100 years of locomotive manufacturing experience.” “GE Transportation is committed to growth by focusing on technical leadership, deep enduring customer relationships and global competitiveness,” said Lorenzo Simonelli, President and CEO of GE Transportation. “We are very pleased to be working with Tülomsaş on this MOU as it is a natural step along the path to regional localization of our capabilities.” Added Simonelli: “We're investing in Turkey because of its strategic proximity to the customers we wish to serve and its advanced technology and manufacturing skills. Finally, we hope to leverage GE’s longstanding expertise and global reach to be a true partner in the economic development of the country. “ GE’s PowerHaul series locomotives are driven by the 16-cylinder PowerHaul engine, which is GE’s most technologically advanced locomotive engine to-date. This new engine combined with other technologies from GE is projected to reduce PowerHaul Locomotive fuel use by up to 9% compared to current operating fleet averages. The 3,700 GHP engine is European Stage IIIa compliant and Ecomagination certified. Ecomagination is a GE-wide commitment to developing technology designed to help GE customers satisfy environmental challenges, while maximizing performance and reducing cost. GE Transportation’s PowerHaul Locomotive is based on the company’s global Evolution® Series locomotive platform introduced in 2005. With close to 3,000 units in use today, the Evolution Series locomotive is one of GE Transportation’s best-selling products worldwide. “The PowerHaul engine used in these locomotives significantly increases fuel efficiency while lowering emissions, said Simonelli. “PowerHaul Locomotives are designed for cost-effective long-haul operating range, high pulling power, long-term emissions compliance and reduced life-cycle cost.” GE Transportation received an order for 30 locomotives, powered by GE’s PowerHaul engine, from UK-based Freightliner Group Ltd. in November 2007. The purchase represented the largest order of freight locomotives in Freightliner’s history and the PowerHaul engine’s debut into the UK and European market place. More than 16,500 GE locomotives are currently in use in more than 50 countries around the world. GE Transportation has evolved from a supplier to the North American rail industry to a global transportation leader. Through the end of 2008, international locomotive orders will contribute more than 40% of the company’s locomotive-related revenue.
Monday, December 22, 2008
GE Guidance For 2008-2009
December 16, 2008 06:12 PM Eastern Time
GE Provides Outlook for 2008 and 2009
2008 and 2009 Highlights (Continuing Operations)
GE Provides Outlook for 2008 and 2009
2008 and 2009 Highlights (Continuing Operations)
>Reconfirms December 2, 2008 earnings per share (EPS) outlook of $.50-.52 excluding charges ($.36-.42, including charges), and full-year 2008 EPS of $1.78-1.84
>Plans for 0-5% Industrial earnings growth and approximately $5 billion of financial services earnings in 2009
>Maintains annual dividend at $1.24 in 2009
>Eliminates quarterly EPS guidance but will provide full year operating framework
>Will continue to run Consumer & Industrial (C&I) as part of the portfolio
FAIRFIELD, Conn.--(BUSINESS WIRE)--GE (NYSE: GE) today reconfirmed December 2, 2008, fourth quarter EPS outlook of $.50-.52, excluding the previously announced $1.0-1.4 billion of charges ($.36-.42 including charges). The Company said it expects full-year 2008 EPS of $1.78-1.84 from $185 billion in revenue. GE Chairman and CEO Jeff Immelt provided this operational update at the Company's annual outlook meeting in New York.
“While 2008 has been a challenging year for the global economy and for many of our businesses, we still expect to earn over $18 billion and outperform the S&P 500 Industrials and Financials sectors,” Chairman and CEO Jeff Immelt said. “We expect the difficult market conditions to continue in 2009.
“We have taken a number of decisive actions to respond to the tough environment and position the Company for 2009 and beyond,” Immelt said. “Our industrial businesses have superior technology, multiple revenue streams, geographic diversity and substantial backlogs. In addition, we are aggressively reducing costs and improving cash generation. In 2009, we have set forth a framework of industrial businesses’ earnings growth of 0-5%. And we will continue to run our C&I business as part of the portfolio,” Immelt said.
“Our financial services businesses, while slowed by the current financial crisis, are strong, global, middle market franchises with a conservative originate-to-hold model backed by senior secured collateral. We expect financial services to earn approximately $5 billion in 2009.
“We are focused on our Company-wide initiatives of growing organic revenue, reducing costs and expanding margins. We expect our major equipment and services backlog to remain strong in 2009, and we will expand our industrial margins, which already compare favorably to our competitors,” Immelt said. “We are committed to investing in innovation and technology even in these challenging times. We will maintain our $1 billion investment in executive development and training, and we have allocated $6 billion for technology spend in 2009. Because of our long-term investment in clean energy and healthcare, GE is well positioned to support governments around the world as they invest in infrastructure. This morning we received an approximately $3 billion order for gas turbines in Iraq to support the reconstruction of their power generating capability.”
The GE Board of Directors today declared a quarterly dividend of $0.31 per outstanding share of its common stock, for a full-year total dividend of $1.24 in 2009, consistent with the 2008 dividend payment. GE has paid a dividend every year since 1899. The fourth quarter dividend is payable January 26, 2009, to shareowners of record at the close of business on December 29, 2008. The ex-dividend date is December 24, 2008.
The Company also announced that it will no longer provide specific quarterly EPS guidance. Instead, the Company will provide a full-year operating framework with detail in the industrial and financial businesses. The Company remains committed to high levels of disclosure and transparency, and will continue to report all of its quarterly segment details.
“We have multiple drivers of growth in a downturn, including services, infrastructure and strong margins,” Immelt said. “We are committed to our strategy of growing globally, driving innovation, developing partnerships and using our scale. We are confident that as the economy recovers, GE will return to its historical earnings growth rate.”
The GE Board of Directors today declared a quarterly dividend of $0.31 per outstanding share of its common stock, for a full-year total dividend of $1.24 in 2009, consistent with the 2008 dividend payment. GE has paid a dividend every year since 1899. The fourth quarter dividend is payable January 26, 2009, to shareowners of record at the close of business on December 29, 2008. The ex-dividend date is December 24, 2008.
The Company also announced that it will no longer provide specific quarterly EPS guidance. Instead, the Company will provide a full-year operating framework with detail in the industrial and financial businesses. The Company remains committed to high levels of disclosure and transparency, and will continue to report all of its quarterly segment details.
“We have multiple drivers of growth in a downturn, including services, infrastructure and strong margins,” Immelt said. “We are committed to our strategy of growing globally, driving innovation, developing partnerships and using our scale. We are confident that as the economy recovers, GE will return to its historical earnings growth rate.”
Tuesday, November 18, 2008
GE Gets Airbus Contract
GE Awarded A350XWB Wing Trailing Edge Package
HAMBLE, United Kingdom--(BUSINESS WIRE)--
HAMBLE, United Kingdom--(BUSINESS WIRE)--
GE Aviation today announced a contract award with Airbus for the design and manufacture of composite and metallic sub assemblies and components for the A350XWB wing trailing edge. GE’s facility in Hamble will provide the design and development, and the manufacturing will be carried out with GE in Hamble and Suzhou China.
“With this award for the A350XWB, GE builds on its solid reputation as a supplier to Airbus for trailing edge sub assemblies and components for A340, A380 and A400M. We are providing an all-around solution to Airbus for major structural components,” said Lorraine Bolsinger, president and CEO for GE Aviation Systems. “This program takes advantage of GE’s global infrastructure in support of Airbus’ already successful A350XWB.”
The A350XWB package consists of the trailing edge details & the trailing edge secondary structures. These components and sub assemblies interface with the rear spar, wing skins and the movable portion of the wing to form a major part of the wing.
All components are designed using the latest computer technology and manufacturing techniques, and utilize GE’s investment in extended facilities including thin wall high speed machining, advanced composites and determinate assembly methods, to achieve the best possible optimization.
“With this award for the A350XWB, GE builds on its solid reputation as a supplier to Airbus for trailing edge sub assemblies and components for A340, A380 and A400M. We are providing an all-around solution to Airbus for major structural components,” said Lorraine Bolsinger, president and CEO for GE Aviation Systems. “This program takes advantage of GE’s global infrastructure in support of Airbus’ already successful A350XWB.”
The A350XWB package consists of the trailing edge details & the trailing edge secondary structures. These components and sub assemblies interface with the rear spar, wing skins and the movable portion of the wing to form a major part of the wing.
All components are designed using the latest computer technology and manufacturing techniques, and utilize GE’s investment in extended facilities including thin wall high speed machining, advanced composites and determinate assembly methods, to achieve the best possible optimization.
Friday, October 10, 2008
GE Meets The Street
Fairfield, Conn., Oct. 10, 2008 – GE announced today third quarter 2008 earnings from continuing operations of $4.5 billion, or $.45 per share, down 12% and 10%, respectively, from third quarter 2007, driven primarily by a decrease in financial services earnings. Third quarter revenues from continuing operations were $47.2 billion, up 11%.
GE Chairman and CEO Jeff Immelt said, “On September 25, we revised our third-quarter and full-year 2008 guidance to reflect the current volatile environment. Reported earnings are fully in line with guidance, and we have continued to take decisive steps to strengthen GE in a tough environment. “Our infrastructure and media businesses continued to see signs of strength,” Immelt said. “Energy Infrastructure led the quarter with a 31% increase in segment profit based on broad-based global demand and double-digit increases in orders and services. NBC Universal grew segment profit 10%, its eighth straight quarter of growth.
3Q 2008 Earnings In Line with 9/25/08 Revised Guidance (Continuing Operations)
............................................................9/25 Forecast........................... Actual
Earnings per share....................................$.43-$.48.................................$.45, (10%)
Industrial segment earnings (ex. C&I)...........+10-15%..................................+12%
Financial services earnings.......................~$2.0 billion...............................$2.0 billion, (38%)
Infrastructure orders................................+10%........................................+9%
Commercial paper......................................<$90 billion............................$88 billion
Board-approved plan to maintain dividend at $1.24 per share through 2009
Other Highlights (Continuing Operations)
Industrial organic revenue growth of 10%; total organic revenue growth of 3%
Global revenue growth of 14%; global industrial revenue growth of 20%
Total orders backlog of $170 billion; equipment backlog up 19%; service backlog up 22%
ROTC of 17%; Industrial CFOA growth of 5%
Higher loss provisions of $0.5 billion
Cable and films had a solid quarter, and the success of the Beijing Olympics showed the value of the network model. Technology Infrastructure grew segment profit 2%, with Aviation’s strong performance partially offset by a challenging quarter at Healthcare.
“Overall industrial growth should continue based on solid orders. Infrastructure orders grew 9%, with 5% growth in equipment and 16% growth in service,” Immelt said. “Our total orders backlog stands at $170 billion, up 20% from last year. We are encouraged by our sustained orders growth in services, as these revenues are reliable with attractive margins even in a period of economic volatility.
“Our financial services business generated $2 billion of earnings, consistent with our revised
expectations. While GE Capital is not immune from the current environment, we continued to
outperform our financial services peers. We are improving our margins and focusing these
businesses on the right products and markets. GE Capital is on track to earn over $9 billion for the year,” Immelt said.
“In addition, GE has taken proactive steps to reduce leverage and improve liquidity, consistent with being one of six Triple-A-rated industrial companies in the U.S. We have raised $15 billion of committed capital that makes the Company more secure in the short term, but could be used to play offense in the long term,” Immelt said.
Third Quarter 2008 Financial Highlights:
Earnings from continuing operations were $4.5 billion, down 12% from $5.1 billion in the third
quarter of 2007. EPS from continuing operations was $.45, down 10% from last year. Segment profit fell 11% in the quarter, as strong 31% growth at Energy Infrastructure was more than offset by a 33% decline at Capital Finance.
Including the effects of discontinued operations, third quarter net earnings were $4.3 billion ($.43 per share) in 2008 and $5.6 billion ($.54 per share) in the third quarter of 2007.
Revenues grew 11% to $47.2 billion. GE Capital Services’ (GECS) revenues grew 2% over last year to $18.4 billion. Industrial sales were $28.9 billion, an increase of 17% from the third quarter of 2007. Cash generated from GE operating activities in the first nine months of 2008 totaled $13.6 billion, down 18% from $16.7 billion last year, reflecting a $3.6 billion decrease in GECS’ dividends primarily due to a non-repeat $2.7 billion special dividend and a third quarter 2008 reduction in the GECS dividend rate to 10% of earnings. The Company had solid Industrial cash flow from operating activities of $11.3 billion, an increase of 5%, for the first nine months of 2008.
“We are on track to meet our September 25 revised guidance for the full year, adjusted for dilution,” Immelt said. “We have taken a number of steps to protect investors from the downside risk in financial services, and we have ways to mitigate potential disruptions in infrastructure and media markets, but the environment remains challenging. We have big backlogs, great products, stable service revenue, strong operating discipline, an unmatched global position and multiple revenue streams. As a result, the Company is well positioned to perform in a very difficult environment, and our Board has approved our plan to sustain the GE dividend through 2009,” Immelt said. GE will discuss preliminary third quarter 2008 results on a conference call and Webcast at 8:30 a.m. ET today. Call information is available at www.ge.com/investor, and related charts will be posted there prior to the call.
GE Chairman and CEO Jeff Immelt said, “On September 25, we revised our third-quarter and full-year 2008 guidance to reflect the current volatile environment. Reported earnings are fully in line with guidance, and we have continued to take decisive steps to strengthen GE in a tough environment. “Our infrastructure and media businesses continued to see signs of strength,” Immelt said. “Energy Infrastructure led the quarter with a 31% increase in segment profit based on broad-based global demand and double-digit increases in orders and services. NBC Universal grew segment profit 10%, its eighth straight quarter of growth.
3Q 2008 Earnings In Line with 9/25/08 Revised Guidance (Continuing Operations)
............................................................9/25 Forecast........................... Actual
Earnings per share....................................$.43-$.48.................................$.45, (10%)
Industrial segment earnings (ex. C&I)...........+10-15%..................................+12%
Financial services earnings.......................~$2.0 billion...............................$2.0 billion, (38%)
Infrastructure orders................................+10%........................................+9%
Commercial paper......................................<$90 billion............................$88 billion
Board-approved plan to maintain dividend at $1.24 per share through 2009
Other Highlights (Continuing Operations)
Industrial organic revenue growth of 10%; total organic revenue growth of 3%
Global revenue growth of 14%; global industrial revenue growth of 20%
Total orders backlog of $170 billion; equipment backlog up 19%; service backlog up 22%
ROTC of 17%; Industrial CFOA growth of 5%
Higher loss provisions of $0.5 billion
Cable and films had a solid quarter, and the success of the Beijing Olympics showed the value of the network model. Technology Infrastructure grew segment profit 2%, with Aviation’s strong performance partially offset by a challenging quarter at Healthcare.
“Overall industrial growth should continue based on solid orders. Infrastructure orders grew 9%, with 5% growth in equipment and 16% growth in service,” Immelt said. “Our total orders backlog stands at $170 billion, up 20% from last year. We are encouraged by our sustained orders growth in services, as these revenues are reliable with attractive margins even in a period of economic volatility.
“Our financial services business generated $2 billion of earnings, consistent with our revised
expectations. While GE Capital is not immune from the current environment, we continued to
outperform our financial services peers. We are improving our margins and focusing these
businesses on the right products and markets. GE Capital is on track to earn over $9 billion for the year,” Immelt said.
“In addition, GE has taken proactive steps to reduce leverage and improve liquidity, consistent with being one of six Triple-A-rated industrial companies in the U.S. We have raised $15 billion of committed capital that makes the Company more secure in the short term, but could be used to play offense in the long term,” Immelt said.
Third Quarter 2008 Financial Highlights:
Earnings from continuing operations were $4.5 billion, down 12% from $5.1 billion in the third
quarter of 2007. EPS from continuing operations was $.45, down 10% from last year. Segment profit fell 11% in the quarter, as strong 31% growth at Energy Infrastructure was more than offset by a 33% decline at Capital Finance.
Including the effects of discontinued operations, third quarter net earnings were $4.3 billion ($.43 per share) in 2008 and $5.6 billion ($.54 per share) in the third quarter of 2007.
Revenues grew 11% to $47.2 billion. GE Capital Services’ (GECS) revenues grew 2% over last year to $18.4 billion. Industrial sales were $28.9 billion, an increase of 17% from the third quarter of 2007. Cash generated from GE operating activities in the first nine months of 2008 totaled $13.6 billion, down 18% from $16.7 billion last year, reflecting a $3.6 billion decrease in GECS’ dividends primarily due to a non-repeat $2.7 billion special dividend and a third quarter 2008 reduction in the GECS dividend rate to 10% of earnings. The Company had solid Industrial cash flow from operating activities of $11.3 billion, an increase of 5%, for the first nine months of 2008.
“We are on track to meet our September 25 revised guidance for the full year, adjusted for dilution,” Immelt said. “We have taken a number of steps to protect investors from the downside risk in financial services, and we have ways to mitigate potential disruptions in infrastructure and media markets, but the environment remains challenging. We have big backlogs, great products, stable service revenue, strong operating discipline, an unmatched global position and multiple revenue streams. As a result, the Company is well positioned to perform in a very difficult environment, and our Board has approved our plan to sustain the GE dividend through 2009,” Immelt said. GE will discuss preliminary third quarter 2008 results on a conference call and Webcast at 8:30 a.m. ET today. Call information is available at www.ge.com/investor, and related charts will be posted there prior to the call.
Wednesday, October 1, 2008
GE and Buffett
GE ANNOUNCES COMMON STOCK OFFERING; WARREN BUFFETT ANNOUNCES INVESTMENT IN GE
FAIRFIELD, Conn.—October 1, 2008-- GE today announced plans to offer at least $12 billion of common stock to the public. The underwriters will have a 30-day option to purchase shares representing an additional 15%of the offering amount from GE to cover over allotments, if any. The offering is expected to be priced prior to tomorrow’s market open in the U.S.
In addition, GE announced that it has reached agreement to sell $3 billion of perpetual preferred stock in a private offering to Berkshire Hathaway, Inc. The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term.
Berkshire Hathaway Chairman and CEO Warren Buffett said, “GE is the symbol of American business to the world. I have been a friend and admirer of GE and its leaders for decades. They have strong global brands and businesses with which I am quite familiar. I am confident that GE will continue to be successful in the years to come.”
GE CEO Jeff Immelt said, “This action does two things for GE investors. First, it enhances our flexibility and allows us to execute on our liquidity plan even faster. Second, it gives us the opportunity to play offense in this market should conditions allow. In addition, we remain committed to the Triple A rating and in the recent market volatility, we continue to successfully meet our commercial paper needs.
“The economic environment remains volatile,” Immelt said. “However, the company’s performance remains on track with the earnings guidance we provided last week for 2008, including third quarter financial services earnings of approximately $2 billion and industrial earnings growth of between 10 and 15 percent, excluding our Consumer & Industrial business. “
Goldman, Sachs & Co. is the bookrunner for the transaction. GE expects that Banc of America Securities, LLC, Citi, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley will be added as additional bookrunners. Copies of the prospectus for the offering may be obtained from Goldman, Sachs & Co., Attn: Prospectus Department, 85 Broad St., New York, NY 10004 or by faxing (212) 902-9316 or by emailing prospectus-ny@ny.email.gs.com.
A registration statement relating to these securities has been filed and is effective. This press release is neither an offer to sell, nor a solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The proposed offering will be made only by means of a prospectus.
FAIRFIELD, Conn.—October 1, 2008-- GE today announced plans to offer at least $12 billion of common stock to the public. The underwriters will have a 30-day option to purchase shares representing an additional 15%of the offering amount from GE to cover over allotments, if any. The offering is expected to be priced prior to tomorrow’s market open in the U.S.
In addition, GE announced that it has reached agreement to sell $3 billion of perpetual preferred stock in a private offering to Berkshire Hathaway, Inc. The perpetual preferred stock has a dividend of 10% and is callable after three years at a 10% premium. In conjunction with this offering, Berkshire Hathaway will also receive warrants to purchase $3 billion of common stock with a strike price of $22.25 per share, which is exercisable at any time for a five-year term.
Berkshire Hathaway Chairman and CEO Warren Buffett said, “GE is the symbol of American business to the world. I have been a friend and admirer of GE and its leaders for decades. They have strong global brands and businesses with which I am quite familiar. I am confident that GE will continue to be successful in the years to come.”
GE CEO Jeff Immelt said, “This action does two things for GE investors. First, it enhances our flexibility and allows us to execute on our liquidity plan even faster. Second, it gives us the opportunity to play offense in this market should conditions allow. In addition, we remain committed to the Triple A rating and in the recent market volatility, we continue to successfully meet our commercial paper needs.
“The economic environment remains volatile,” Immelt said. “However, the company’s performance remains on track with the earnings guidance we provided last week for 2008, including third quarter financial services earnings of approximately $2 billion and industrial earnings growth of between 10 and 15 percent, excluding our Consumer & Industrial business. “
Goldman, Sachs & Co. is the bookrunner for the transaction. GE expects that Banc of America Securities, LLC, Citi, Deutsche Bank Securities, J.P. Morgan and Morgan Stanley will be added as additional bookrunners. Copies of the prospectus for the offering may be obtained from Goldman, Sachs & Co., Attn: Prospectus Department, 85 Broad St., New York, NY 10004 or by faxing (212) 902-9316 or by emailing prospectus-ny@ny.email.gs.com.
A registration statement relating to these securities has been filed and is effective. This press release is neither an offer to sell, nor a solicitation of an offer to buy, nor shall there be any sale of, these securities in any state in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state. The proposed offering will be made only by means of a prospectus.
Thursday, September 25, 2008
GE Adjusts Earnings Outlook
FAIRFIELD, Conn., September 25, 2008 - GE today revised its earnings guidance for the third quarter, to a range of $0.43 to $0.48 per share from $0.50 to $0.54, reflecting unprecedented weakness and volatility in the financial services markets. GE now expects that its financial services businesses will earn approximately $2 billion in the third quarter, which, while impacted by current market conditions, is expected to exceed the earnings of any financial services company. Industrial earnings are expected to continue to be strong in the quarter, led by excellent performance in the infrastructure and media businesses and are expected to increase approximately 10-15%, excluding Consumer & Industrial.
GE anticipates that difficult conditions in the financial services markets are not likely to improve in the near future, and as a result, is revising its earnings guidance for the full year to $19.5 to $21 billion ($1.95 to $2.10 per share) from $22 to $23 billion ($2.20 to $2.30 per share).
GE also reaffirmed its longstanding commitment to its Triple-A credit rating. While GE’s funding position is strong and GE has performed well during the recent market volatility, it is taking steps to strengthen its already strong capital and liquidity position, including:
GE anticipates that difficult conditions in the financial services markets are not likely to improve in the near future, and as a result, is revising its earnings guidance for the full year to $19.5 to $21 billion ($1.95 to $2.10 per share) from $22 to $23 billion ($2.20 to $2.30 per share).
GE also reaffirmed its longstanding commitment to its Triple-A credit rating. While GE’s funding position is strong and GE has performed well during the recent market volatility, it is taking steps to strengthen its already strong capital and liquidity position, including:
• Increasing capital in GE Capital to reduce leverage ratios through a reduction in the GE Capital dividend to GE from 40% to 10% of GE Capital’s earnings and by suspending the current GE stock buyback.
• With a strong liquidity position and having already completed $70 billion in long-term funding year-to-date, GE Capital does not need to raise any additional long-term debt for the remainder of 2008.
• Although demand remains strong, reducing GE Capital’s commercial paper to 10-15% of GE Capital’s total debt going forward.
• Resizing GE to deliver 60%/40% industrial-financial services earnings split by end of 2009.
GE also stated that its Board of Directors had approved management’s plan to maintain GE’s quarterly dividend of $0.31 per share, totaling $1.24 per share annually, through the end of 2009.
• Although demand remains strong, reducing GE Capital’s commercial paper to 10-15% of GE Capital’s total debt going forward.
• Resizing GE to deliver 60%/40% industrial-financial services earnings split by end of 2009.
GE also stated that its Board of Directors had approved management’s plan to maintain GE’s quarterly dividend of $0.31 per share, totaling $1.24 per share annually, through the end of 2009.
GE Chairman and CEO Jeff Immelt said: "We run the company for the long term and are taking the actions expected from a Triple-A-rated company. Given the recent dramatic developments in the financial markets, we have made some tough decisions to further reduce risk and strengthen our balance sheet while maintaining our dividend. We have suspended the stock buyback to reduce GE Capital leverage, while still being able to pursue opportunistic acquisitions. We remain fully committed to the Triple-A credit rating, which distinguishes GE.
"Our industrial business fundamentals remain very strong, with continued global strength in our core industries," Immelt said. "Long-cycle industrial and service orders are expected to be up double digits in the third quarter. In our media business, the Beijing Olympics were an unqualified success in all respects for NBCU, and cable ratings remain very positive. While the financial services markets remain challenging and require us to adapt quickly to the rapidly changing environment, we will continue to run GE Capital to be safe and secure, while earning high margins on conservatively underwritten business."
Since 2001, GE has been executing its strategic plan to invest in high-return, high-technology industrial businesses and to reduce its lower-growth, lower-yield financial services businesses. This includes $34 billion in financial services dispositions over the last seven years, such as the sale of reinsurance, bond insurance and some parts of its consumer finance business and this week, its Japanese consumer finance business for $5.4 billion.
Friday, July 11, 2008
GE Sheds - Repositions GE Money
GE Money Agrees To Sell Its Consumer Finance Business In Japan To Shinsei Bank
Proposed transaction is in line with objective to redeploy capital for higher returns
TOKYO, Japan – July 11, 2008 – GE Money, the consumer financial services unit of the General Electric Company (NYSE: GE), announced today it has signed an agreement to sell its Japanese consumer finance business, which includes the Lake personal loan business, wholly owned credit cards and mortgages under GE Consumer Finance Co Ltd and its subsidiaries, to Shinsei Bank, a leading diversified Japanese bank. The transaction, which is subject to closing conditions, including regulatory approvals, is valued at Y580 billion (US$5.4 billion) and is expected to close in the third quarter of 2008.
Under the terms of the agreement, in addition to acquiring GE Money’s loan, credit card, and mortgage businesses, Shinsei Bank plans to retain and work closely with GE employees in these businesses as part of its strategy to expand its position in the Japanese consumer credit marketplace.
Commenting on the transaction, William H. Cary, President and CEO of GE Money, said, “In an extremely challenging environment, we have completed an agreement that fully meets our core strategic objectives: giving our Japanese business the opportunity to work with a partner committed to investing in Japan, and allowing GE Money and GE to redeploy its capital to areas which will generate strong sustainable long-term growth and returns for our shareowners.
ABOUT GE MONEY With more than $200 billion in assets, GE Money, a unit of General Electric Company (NYSE: GE) is a leading provider of retail banking and credit services to consumers, retailers, and auto dealers in 55 countries around the world. With more than 130 million global customers, GE Money, headquartered in London, UK, offers a range of financial products, including private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, debt consolidation and home equity loans, and credit insurance. More information can be found at http://global.gemoney.com/.
Proposed transaction is in line with objective to redeploy capital for higher returns
TOKYO, Japan – July 11, 2008 – GE Money, the consumer financial services unit of the General Electric Company (NYSE: GE), announced today it has signed an agreement to sell its Japanese consumer finance business, which includes the Lake personal loan business, wholly owned credit cards and mortgages under GE Consumer Finance Co Ltd and its subsidiaries, to Shinsei Bank, a leading diversified Japanese bank. The transaction, which is subject to closing conditions, including regulatory approvals, is valued at Y580 billion (US$5.4 billion) and is expected to close in the third quarter of 2008.
Under the terms of the agreement, in addition to acquiring GE Money’s loan, credit card, and mortgage businesses, Shinsei Bank plans to retain and work closely with GE employees in these businesses as part of its strategy to expand its position in the Japanese consumer credit marketplace.
Commenting on the transaction, William H. Cary, President and CEO of GE Money, said, “In an extremely challenging environment, we have completed an agreement that fully meets our core strategic objectives: giving our Japanese business the opportunity to work with a partner committed to investing in Japan, and allowing GE Money and GE to redeploy its capital to areas which will generate strong sustainable long-term growth and returns for our shareowners.
ABOUT GE MONEY With more than $200 billion in assets, GE Money, a unit of General Electric Company (NYSE: GE) is a leading provider of retail banking and credit services to consumers, retailers, and auto dealers in 55 countries around the world. With more than 130 million global customers, GE Money, headquartered in London, UK, offers a range of financial products, including private label credit cards, personal loans, bank cards, auto loans and leases, mortgages, debt consolidation and home equity loans, and credit insurance. More information can be found at http://global.gemoney.com/.
Some Good News For The Market - GE
GE Reports Second Quarter 2008 EPS of $.54;Revenues of $46.9 billion, up 11%;Global Revenues of $25 billion, up 24%;Orders of $27 billion, up 8%;Infrastructure Segment Profit of $3.2 billion, up 24%
2Q 2008 Highlights (Continuing Operations)
>Earnings per share (EPS) of $.54, flat year-over-year
>Revenues of $46.9 billion, up 11%; organic revenue growth of 5%; Industrial organic revenue growth of 9%
>Financial Services earnings of $2.8 billion, up 15%
>Global revenues of $25 billion, up 24%; emerging markets revenues of $10 billion, up 20%
>Services orders of $9.5 billion, up 19%; major equipment orders of $13.7 billion, up 4%, outpacing shipments 1.3x; total orders of $26.9 billion, up 8%
>Major equipment backlog of $55 billion, up 25%; customer service agreements (CSA) backlog of $113 billion, up 17%
>Return on average total capital (ROTC) of 17.6%
>Industrial cash flow from operating activities growth of 5%
>Stock repurchase $2.5 billion YTD; $1.4 billion for second quarter
>Reaffirming 2008 full-year continuing EPS guidance of $2.20 – 2.30, up 0-5%
Second Quarter 2008 Financial Highlights:
Earnings from continuing operations were $5.4 billion, down 4% from $5.6 billion in the second quarter of 2007. EPS from continuing operations were $.54, unchanged from last year. Segment profit rose 7%, led by GE Infrastructure’s strong double-digit growth of 24% in the quarter.
Including the effects of discontinued operations, second quarter net earnings were $5.1 billion ($.51 per share) in 2008 and $5.4 billion ($.52 per share) in the second quarter of 2007.
Revenues grew 11% to $46.9 billion. GE Capital Services’ (GECS) revenues grew 11% over last year to $19.1 billion. Industrial sales were $27.8 billion, an increase of 15% from the second quarter of 2007.
Cash generated from GE operating activities in the first six months of 2008 totaled $9.3 billion, down 20% from $11.6 billion last year, reflecting a $2.7 billion decrease in GECS’ dividends due to the non-repeat of a special $2.7 billion dividend related to proceeds from the sale of Swiss Re common stock and GE Life in the first half of 2007. The Company had solid Industrial cash flow from operating activities of $7.3 billion, an increase of 5%, for the first six months of 2008.
“Our business fundamentals remain strong. We have a significant equipment backlog and growing, high margin service revenues. Our products and services help make our customers more productive in times of high energy costs. We have solid cash flow to reinvest in the businesses, pay an attractive dividend and execute a stock buyback program. We are positioned for long-term growth. For the third quarter 2008, we are forecasting EPS from continuing operations of $.50-.54, up 0-8% over comparable 2007 earnings, and reaffirming guidance of $2.20-2.30, up 0-5% for the full year,” Immelt said
Thursday, July 10, 2008
GE For The Future
GE by the Numbers
For more than 130 years, GE has stayed on top by winning in challenging times. Today is no different. Despite the current turbulence in the markets, GE has continued to deliver strong performance while it transforms its businesses to take advantage of the biggest business opportunities of the new century.
We have rebuilt our portfolio over the last several years with the goal of positioning the company for long-term growth. As a result, GE in 2008 is a high-performance company that is more global, technology-based and customer-focused. While more work remains, progress continues:
-GE has transformed its portfolio of businesses in the past several years, including $80 billion in acquisitions and $50 billion in dispositions, which may be the largest portfolio makeover in the history of business.
-GE has grown revenues 13% and earnings per share 14% over the past five years (2003-2007). -GE earnings have nearly doubled since 2003, growing from $13.3 billion to $22.5 billion in 2007. Over the last 5, 10 and 15 years, GE has grown revenue, earnings and cash flow on average 10% or more.
-GE's growth around the globe is accelerating. In 2007, GE had global (non-U.S.) revenue growth of 22%, with more than half of GE's revenues from outside the U.S.
-GE's organic growth rate of 9% is up 3% since 2004, and has consistently been 2-3 times global GDP.
-GE is one of five "Triple A"-rated industrial companies.
-GE increased its 2008 dividends paid to shareholders by 11%, the 32nd straight annual increase.
-GE's ecomagination investments are on track to yield $25 billion in revenues by 2010 - proof that GE is ahead of the curve in providing environmental solutions.
2007 was a strong year for GE with order growth of 18%, free cash flow of $19 billion, an equipment backlog of $49 billion and service backlog of $109 billion.
For more than 130 years, GE has stayed on top by winning in challenging times. Today is no different. Despite the current turbulence in the markets, GE has continued to deliver strong performance while it transforms its businesses to take advantage of the biggest business opportunities of the new century.
We have rebuilt our portfolio over the last several years with the goal of positioning the company for long-term growth. As a result, GE in 2008 is a high-performance company that is more global, technology-based and customer-focused. While more work remains, progress continues:
-GE has transformed its portfolio of businesses in the past several years, including $80 billion in acquisitions and $50 billion in dispositions, which may be the largest portfolio makeover in the history of business.
-GE has grown revenues 13% and earnings per share 14% over the past five years (2003-2007). -GE earnings have nearly doubled since 2003, growing from $13.3 billion to $22.5 billion in 2007. Over the last 5, 10 and 15 years, GE has grown revenue, earnings and cash flow on average 10% or more.
-GE's growth around the globe is accelerating. In 2007, GE had global (non-U.S.) revenue growth of 22%, with more than half of GE's revenues from outside the U.S.
-GE's organic growth rate of 9% is up 3% since 2004, and has consistently been 2-3 times global GDP.
-GE is one of five "Triple A"-rated industrial companies.
-GE increased its 2008 dividends paid to shareholders by 11%, the 32nd straight annual increase.
-GE's ecomagination investments are on track to yield $25 billion in revenues by 2010 - proof that GE is ahead of the curve in providing environmental solutions.
2007 was a strong year for GE with order growth of 18%, free cash flow of $19 billion, an equipment backlog of $49 billion and service backlog of $109 billion.
Monday, June 9, 2008
Gee, No GE
GE to invest $2bn in China
By Geoff Dyer and Peter Marsh
Published: April 16 2008 03:00 Last updated: April 16 2008 03:00
General Electric plans to invest up to $2bn in acquisitions and other deals in China over the next three years as part of a strategy to double its revenues in the country. The world's biggest industrial company is looking to hire a team of 20 "in-house investment bankers" to conduct the deals in China. "If we do not invest $2bn over the next three years, I would be disappointed," said Steve Bertamini, chairman of GE's Chinese operations, in an interview with the Financial Times.
The aggressive investment plans, which will include acquisitions and joint ventures, underline GE's intention to expand its China business rapidly at a time when its domestic operations face a slowing US economy.
Mr Bertamini said the team of deal specialists had already been expanded from two to eight and the recent sharp drop in the mainland stock market, which is down nearly a half from its peak, would make it easier to negotiate investments.
"One of the reasons we have not done much so far is because the prices have been so high," Mr Bertamini said. "The risk . . . is that share prices take off again."
GE said it would continue to enter into joint ventures with leading Chinese companies in several sectors where the group is active - such as infrastructure and power generation.
GE plans to increase its 2007 revenues in China of $4.4bn to $10bn by 2010, which would require the US company to expand more than twice as fast as the economy's double-digit rate of growth.
"The wider problems in the credit market and the signs of a slowing in the overall global economy have not entered the picture [in China]," he said.
The comments come just days after GE slashed its full-year earnings forecast because of the effect of the credit crunch.
Geoff Dyer and Peter Marsh, Shanghai
By Geoff Dyer and Peter Marsh
Published: April 16 2008 03:00 Last updated: April 16 2008 03:00
General Electric plans to invest up to $2bn in acquisitions and other deals in China over the next three years as part of a strategy to double its revenues in the country. The world's biggest industrial company is looking to hire a team of 20 "in-house investment bankers" to conduct the deals in China. "If we do not invest $2bn over the next three years, I would be disappointed," said Steve Bertamini, chairman of GE's Chinese operations, in an interview with the Financial Times.
The aggressive investment plans, which will include acquisitions and joint ventures, underline GE's intention to expand its China business rapidly at a time when its domestic operations face a slowing US economy.
Mr Bertamini said the team of deal specialists had already been expanded from two to eight and the recent sharp drop in the mainland stock market, which is down nearly a half from its peak, would make it easier to negotiate investments.
"One of the reasons we have not done much so far is because the prices have been so high," Mr Bertamini said. "The risk . . . is that share prices take off again."
GE said it would continue to enter into joint ventures with leading Chinese companies in several sectors where the group is active - such as infrastructure and power generation.
GE plans to increase its 2007 revenues in China of $4.4bn to $10bn by 2010, which would require the US company to expand more than twice as fast as the economy's double-digit rate of growth.
"The wider problems in the credit market and the signs of a slowing in the overall global economy have not entered the picture [in China]," he said.
The comments come just days after GE slashed its full-year earnings forecast because of the effect of the credit crunch.
Geoff Dyer and Peter Marsh, Shanghai
Monday, June 2, 2008
GE A Good Bet
From Barrons
GENERAL ELECTRIC, AT 30.76, closed Friday with a dividend yield of 4.03%. The 10-year Treasury yield was 4.05%. General Electric (ticker: GE) is rated triple-A, rightly. The U.S. government implicitly is rated triple-A, and retains this halo strictly for its taxing authority. GE's yield will grow; your bonds' won't.
Until the past few months, GE's yield has been equal to or below the Treasury yield only once, in early 2003, right before GE's shares and the stock market took off. Maybe this isn't enough to make GE a ripping Buy (identifiable catalysts are few), but it suggests the downside is limited and the shares finally are out of favor enough, after the company's clanging earnings miss last quarter, to improve their risk/reward equation.
At below 14 times expected earnings, GE -- composed of roughly 45% infrastructure/industrial profits, 35% financial, 11% media and 9% health care -- trades in line with a like blend of industry-comparable multiples, based on a back-of-the-envelope reckoning. In other words, an investor at long last need not assume that GE's businesses are above-average -- as, in most cases, they certainly are -- to justify buying the stock.
CEO Jeffrey Immelt admirably turned the other cheek to his predecessor's recent public chiding, when he could have pointed out that former CEO Jack Welch's reputation and personal wealth were swollen beyond calculation by the stock market's general valuation inflation during his tenure. More important, Immelt continues to buy GE shares in the open market, $3.5 million just last week.
GENERAL ELECTRIC, AT 30.76, closed Friday with a dividend yield of 4.03%. The 10-year Treasury yield was 4.05%. General Electric (ticker: GE) is rated triple-A, rightly. The U.S. government implicitly is rated triple-A, and retains this halo strictly for its taxing authority. GE's yield will grow; your bonds' won't.
Until the past few months, GE's yield has been equal to or below the Treasury yield only once, in early 2003, right before GE's shares and the stock market took off. Maybe this isn't enough to make GE a ripping Buy (identifiable catalysts are few), but it suggests the downside is limited and the shares finally are out of favor enough, after the company's clanging earnings miss last quarter, to improve their risk/reward equation.
At below 14 times expected earnings, GE -- composed of roughly 45% infrastructure/industrial profits, 35% financial, 11% media and 9% health care -- trades in line with a like blend of industry-comparable multiples, based on a back-of-the-envelope reckoning. In other words, an investor at long last need not assume that GE's businesses are above-average -- as, in most cases, they certainly are -- to justify buying the stock.
CEO Jeffrey Immelt admirably turned the other cheek to his predecessor's recent public chiding, when he could have pointed out that former CEO Jack Welch's reputation and personal wealth were swollen beyond calculation by the stock market's general valuation inflation during his tenure. More important, Immelt continues to buy GE shares in the open market, $3.5 million just last week.
Wednesday, May 28, 2008
GE Ready To Unplug Appliance Division?
May 28 (Bloomberg) -- General Electric Co. Chief Executive Officer Jeffrey Immelt said LG Electronics Inc. and China's Haier Group Corp. are among potential suitors that may acquire the company's century-old appliances division.
Immelt, who last week told investors the Fairfield, Connecticut-based company is also ``seriously considering'' a spinoff, named Mexico's Controladora Mabe SA, Sweden's Electrolux AB and Turkey's Arcelik A.S. as other potential suitors. The unit may draw bids of $3 billion to $8 billion, according to analysts at Citigroup Inc. and Goldman Sachs Group Inc.
``The players become very obvious,'' Immelt said during a breakfast meeting with businessmen in Seoul today. ``It's Haier in China, LG in Korea and so on. Of course, LG is one of the leading candidates.'' Buying GE's unit would help Seoul-based LG Electronics challenge Whirlpool Corp.'s lead in the production of appliances worldwide, while a purchase by Haier would give the Chinese company a household name to help drive its U.S. expansion. GE said this month it may sell the unit amid calls for the company to speed up divestitures of slower-growing operations.
GE's appliances division is the biggest provider of refrigerators, ovens and dishwashers for newly-built U.S. homes.
LG hasn't decided whether to bid for the GE unit, the company said today in response to a query by the Korea Exchange. LG is ``carefully monitoring'' the sale of GE's appliances division, Chief Executive Officer Nam Yong said yesterday. Zhao Rui, a spokeswoman at Haier, declined to comment. Speculation that LG will bid for GE ``has been overdone, without any concrete developments,'' James Kim, an analyst at Lehman Brothers Holdings Inc., wrote in a note today. ``According to our channel checks, GE and LG Electronics have not talked about this potential acquisition.''
GE fell 13 cents to $30.27 at 10:26 a.m. in New York Stock Exchange composite trading and have declined about 18 percent so far this year and 7 percent this month.
LG Electronics shares fell 3.6 percent to close at 134,000 won in Seoul. The stock has declined 14 percent this month as analysts at JPMorgan Chase & Co. and Deutsche Bank AG cut ratings on the stock, citing lower earnings prospects.
Haier Electronics closed unchanged at HK$1.2 in Hong Kong trading and has declined 28 percent so far this year and is up 1.7 percent this month.
``Both LG and Haier need GE to break into the U.S. market because it has a very strong brand,'' Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, said. ``Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.''
Immelt said today the sale of the appliances unit ``will be a long process.''
There have been ``lots of inquiries'' about the appliances unit, mostly from outside the U.S., and GE is also ``seriously'' considering a spinoff, Immelt said this month.
``We within GE agree that every business has to have a global footprint,'' he said today.
GE's appliances business had 27 percent of the U.S. market in 2006, the latest available data, according to Stephen Tusa, an analyst at JPMorgan Chase & Co. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group estimates.
Whether LG Electronics, Haier or other companies participate in the sale remains to be seen, Immelt told reporters in a separate media briefing in Beijing today.
LG Electronics posted sales of 11.8 trillion won ($11.3 billion), including those of overseas affiliates, in 2007 from appliances. The North American market accounted for 29 percent of the division's first-quarter sales.
China's Economic Observer reported on May 24 that Haier is considering buying the GE unit and has held talks with China Development Bank on financing a bid. Still, the Qingdao, China- based company hasn't contacted GE yet, the newspaper said, citing an unidentified Haier official.
Haier, China's largest maker of home appliances, is the parent of Hong Kong-listed Haier Electronics Group Co. and Shanghai-listed Qingdao Haier Co. In 2005, the company, which sells products in the U.S. through retailers such as Wal-Mart Stores Inc. and Home Depot Inc., pulled out of a $1.28 billion bid for U.S. appliance maker Maytag Corp.
Haier Electronics
Haier Electronics will have sales of about HK$10.6 billion ($1.4 billion) in 2008, UBS AG analysts Randy Zhou and Erica Poon Werkun said in January. Qingdao Haier, which sells refrigerators and freezers, will have sales of 33.5 billion yuan ($4.8 billion) this year, according to UBS.
Qingdao Haier, whose shares are down 45 percent this year, gained 3.2 percent to 12.37 yuan in Shanghai.
Sales of washers, refrigerators and other appliances accounted for more than half of last year's $13.3 billion in sales at GE Consumer & Industrial. GE had total revenue of $172.7 billion last year. More than half of the company's sales come from overseas, while the appliances division is tied to a single market, primarily in the U.S.
Other potential bidders mentioned in analyst reports earlier included South Korea's Samsung Group.
Videocon Industries Ltd., India's largest consumer electronics maker, is studying the viability of a bid for the appliances division, Venugopal N. Dhoot, chairman of the Aurangabad-based company, said May 23.
General Electric today also unveiled a plan to cut its own water consumption by one-fifth by 2012 as part of its companywide conservation program, called ``ecomagination'' begun in 2005. The company also raised its goal of selling environmentally friendlier products to $25 billion by 2010, a 25 percent rise from its projection three years ago.
Immelt, who last week told investors the Fairfield, Connecticut-based company is also ``seriously considering'' a spinoff, named Mexico's Controladora Mabe SA, Sweden's Electrolux AB and Turkey's Arcelik A.S. as other potential suitors. The unit may draw bids of $3 billion to $8 billion, according to analysts at Citigroup Inc. and Goldman Sachs Group Inc.
``The players become very obvious,'' Immelt said during a breakfast meeting with businessmen in Seoul today. ``It's Haier in China, LG in Korea and so on. Of course, LG is one of the leading candidates.'' Buying GE's unit would help Seoul-based LG Electronics challenge Whirlpool Corp.'s lead in the production of appliances worldwide, while a purchase by Haier would give the Chinese company a household name to help drive its U.S. expansion. GE said this month it may sell the unit amid calls for the company to speed up divestitures of slower-growing operations.
GE's appliances division is the biggest provider of refrigerators, ovens and dishwashers for newly-built U.S. homes.
LG hasn't decided whether to bid for the GE unit, the company said today in response to a query by the Korea Exchange. LG is ``carefully monitoring'' the sale of GE's appliances division, Chief Executive Officer Nam Yong said yesterday. Zhao Rui, a spokeswoman at Haier, declined to comment. Speculation that LG will bid for GE ``has been overdone, without any concrete developments,'' James Kim, an analyst at Lehman Brothers Holdings Inc., wrote in a note today. ``According to our channel checks, GE and LG Electronics have not talked about this potential acquisition.''
GE fell 13 cents to $30.27 at 10:26 a.m. in New York Stock Exchange composite trading and have declined about 18 percent so far this year and 7 percent this month.
LG Electronics shares fell 3.6 percent to close at 134,000 won in Seoul. The stock has declined 14 percent this month as analysts at JPMorgan Chase & Co. and Deutsche Bank AG cut ratings on the stock, citing lower earnings prospects.
Haier Electronics closed unchanged at HK$1.2 in Hong Kong trading and has declined 28 percent so far this year and is up 1.7 percent this month.
``Both LG and Haier need GE to break into the U.S. market because it has a very strong brand,'' Castor Pang, an analyst at Sun Hung Kai Securities in Hong Kong, said. ``Buying GE would be a big advertisement for them. After all, the U.S. market is still a very big market.''
Immelt said today the sale of the appliances unit ``will be a long process.''
There have been ``lots of inquiries'' about the appliances unit, mostly from outside the U.S., and GE is also ``seriously'' considering a spinoff, Immelt said this month.
``We within GE agree that every business has to have a global footprint,'' he said today.
GE's appliances business had 27 percent of the U.S. market in 2006, the latest available data, according to Stephen Tusa, an analyst at JPMorgan Chase & Co. The unit had revenue of $7.2 billion in 2007, according to Credit Suisse Group estimates.
Whether LG Electronics, Haier or other companies participate in the sale remains to be seen, Immelt told reporters in a separate media briefing in Beijing today.
LG Electronics posted sales of 11.8 trillion won ($11.3 billion), including those of overseas affiliates, in 2007 from appliances. The North American market accounted for 29 percent of the division's first-quarter sales.
China's Economic Observer reported on May 24 that Haier is considering buying the GE unit and has held talks with China Development Bank on financing a bid. Still, the Qingdao, China- based company hasn't contacted GE yet, the newspaper said, citing an unidentified Haier official.
Haier, China's largest maker of home appliances, is the parent of Hong Kong-listed Haier Electronics Group Co. and Shanghai-listed Qingdao Haier Co. In 2005, the company, which sells products in the U.S. through retailers such as Wal-Mart Stores Inc. and Home Depot Inc., pulled out of a $1.28 billion bid for U.S. appliance maker Maytag Corp.
Haier Electronics
Haier Electronics will have sales of about HK$10.6 billion ($1.4 billion) in 2008, UBS AG analysts Randy Zhou and Erica Poon Werkun said in January. Qingdao Haier, which sells refrigerators and freezers, will have sales of 33.5 billion yuan ($4.8 billion) this year, according to UBS.
Qingdao Haier, whose shares are down 45 percent this year, gained 3.2 percent to 12.37 yuan in Shanghai.
Sales of washers, refrigerators and other appliances accounted for more than half of last year's $13.3 billion in sales at GE Consumer & Industrial. GE had total revenue of $172.7 billion last year. More than half of the company's sales come from overseas, while the appliances division is tied to a single market, primarily in the U.S.
Other potential bidders mentioned in analyst reports earlier included South Korea's Samsung Group.
Videocon Industries Ltd., India's largest consumer electronics maker, is studying the viability of a bid for the appliances division, Venugopal N. Dhoot, chairman of the Aurangabad-based company, said May 23.
General Electric today also unveiled a plan to cut its own water consumption by one-fifth by 2012 as part of its companywide conservation program, called ``ecomagination'' begun in 2005. The company also raised its goal of selling environmentally friendlier products to $25 billion by 2010, a 25 percent rise from its projection three years ago.
Thursday, May 15, 2008
GE To Shed Appliance Division
May 15 (Bloomberg) -- General Electric Co. may sell or seek a partner for the unit that makes refrigerators and washers, ending more than a century in an industry that helped make GE a household name, people familiar with the situation said.
GE, the biggest maker of appliances for new U.S. homes, hired Goldman Sachs Group Inc. to explore options that include a spinoff or auction, according to one of the people, who declined to be identified by name. A sale may bring $5 billion to $8 billion, the Wall Street Journal reported yesterday.
Chief Executive Jeffrey Immelt, who took over from Jack Welch in 2001 and surprised investors with a decline in profit last quarter, has been paring consumer businesses to cope with a slower U.S. economy. The units he's selling don't expand fast enough to help GE reach its goal of 10 percent annual profit growth. Appliances, which like light bulbs are the GE products most familiar to consumers, accounted for about $7.2 billion in sales last year, or just 4.1 percent of the 2007 total.
``We would positively perceive a more aggressive approach to selling off slow-growth businesses,'' Robert Schenosky, a New York-based analyst with Jefferies & Co. who rates the shares ``hold'' and doesn't own any, said in an interview.
Prices for some appliances haven't increased in more than half a century. In 1953, an 11-cubic-foot refrigerator was advertised for more than $500. Today, an 18.2-cubic-foot GE model lists for as little as $519 on the NexTag.com shopping site.
Gary Sheffer, a company spokesman, declined to comment on a possible sale. Fairfield, Connecticut-based GE rose to $32.73 at 9:07 a.m. today in New York, after closing at $32.51 yesterday in regular New York Stock Exchange composite trading.
Housing Slump
U.S. home foreclosure filings climbed 65 percent in April amid a subprime mortgage crisis. Home prices fell the most in 29 years last quarter, making it tougher for homeowners to refinance loans or borrow more money to buy goods such as refrigerators.
Louisville, Kentucky-based GE Appliances accounted for about 13,000 of GE's 327,000 employees as of the end of last year.
``This isn't a piece of business at this point that has got much more incremental opportunity for GE,'' said Nicholas Heymann, an analyst at Sterne, Agee & Leach Inc. in New York, who has a ``hold'' rating on the stock.
Since unveiling his basic plan to shift out of economically sensitive sectors in December 2002, Immelt has divested more than $75 billion in GE businesses, including the plastics and insurance units, while making more than $50 billion in purchases in faster-growing areas such as water treatment and aviation. Investors and analysts have been asking ever since whether he planned to shed appliances and the light-bulb unit.
In December 2007, Immelt put the U.S. private-label credit card division on the block and is also selling the consumer finance unit in Japan, called Lake.
Earnings Surprise
GE's shares fell 13 percent, the most in two decades, on April 11 after Immelt reported a 12 percent decline in first- quarter earnings and said annual profit would trail his $2.42-a- share target. GE changed its forecast to $2.20 to $2.30 a share.
Welch told the GE-owned CNBC network that the surprise had jeopardized Immelt's ``credibility'' and later followed up to reiterate his support for the CEO. Welch had divested the small- appliance business, which made products such as toasters, and consumer electronics in the 1980s.
Since its inception in 1892 through the merger of the Edison Electric Co. and the Thomson Houston Co., GE was usually first to introduce appliances, from the room air conditioner to the two- door refrigerator-freezer combination, according to its Web site.
In 1928, GE introduced the Calrod electric range and about 19 years later came out with the first completely automatic clothes washer. In 1969, it introduced the first side-by-side refrigerator-freezer with an ice and water dispenser in the door.
Valuation
A sale would continue consolidation in the U.S. appliance industry and provide a possible vehicle for overseas companies looking to grab a larger share of the U.S. market.
Sterne Agee's Heymann told Bloomberg Television today he expects the sale may fetch about 9 times earnings before interest, taxes, depreciation and amortization, or about $6.5 billion. Goldman Sachs analyst Deane Dray, in a research note, said reported estimates of a possible value for the deal range from 8 to 12 times Ebitda. Dray rates the stock as ``neutral.''
The biggest recent acquisition of an appliance company was Whirlpool Corp.'s purchase of Maytag Corp. in 2006, creating the world's biggest appliance maker. The final sales price excluding assumed debt was $1.68 billion, or about 8.4 times Maytag's Ebitda in its final four quarters, according to Bloomberg calculations.
Appliance Makers
Haier Group, China's biggest appliance maker, was one of the unsuccessful suitors in the bidding for Maytag. South Korea's LG Electronics Inc. and GE said in February they would share patents on cooking appliances and refrigerators. Sally Lee, a spokeswoman for Seoul-based LG Electronics, declined to comment on the GE report, as did Zhao Rui, a spokeswoman at Haier Group in Qingdao.
``Haier would definitely be interested because they've been trying for years to get a bigger share of the U.S. market,'' said Zhang Xiaoga, an analyst at Orient Securities Co. in Shanghai. He has an ``add'' rating on the company's Qingdao Haier Co. refrigerator and air conditioning unit listed in Shanghai.
Stockholm-based Electrolux AB, the maker of Frigidaire appliances, in April reported its first quarterly loss in more than two years because of the slowdown in the U.S. Electrolux spent 120 million kronor ($20 million) in the first quarter to introduce new products in the U.S.
Royal Philips Electronics NV, Europe's largest consumer- electronics maker, has said it is looking for acquisitions to build its appliances division. The company raised 680 million euros ($1.05 billion) earlier this year when it sold a stake in its liquid-crystal display venture with LG.
GE, the biggest maker of appliances for new U.S. homes, hired Goldman Sachs Group Inc. to explore options that include a spinoff or auction, according to one of the people, who declined to be identified by name. A sale may bring $5 billion to $8 billion, the Wall Street Journal reported yesterday.
Chief Executive Jeffrey Immelt, who took over from Jack Welch in 2001 and surprised investors with a decline in profit last quarter, has been paring consumer businesses to cope with a slower U.S. economy. The units he's selling don't expand fast enough to help GE reach its goal of 10 percent annual profit growth. Appliances, which like light bulbs are the GE products most familiar to consumers, accounted for about $7.2 billion in sales last year, or just 4.1 percent of the 2007 total.
``We would positively perceive a more aggressive approach to selling off slow-growth businesses,'' Robert Schenosky, a New York-based analyst with Jefferies & Co. who rates the shares ``hold'' and doesn't own any, said in an interview.
Prices for some appliances haven't increased in more than half a century. In 1953, an 11-cubic-foot refrigerator was advertised for more than $500. Today, an 18.2-cubic-foot GE model lists for as little as $519 on the NexTag.com shopping site.
Gary Sheffer, a company spokesman, declined to comment on a possible sale. Fairfield, Connecticut-based GE rose to $32.73 at 9:07 a.m. today in New York, after closing at $32.51 yesterday in regular New York Stock Exchange composite trading.
Housing Slump
U.S. home foreclosure filings climbed 65 percent in April amid a subprime mortgage crisis. Home prices fell the most in 29 years last quarter, making it tougher for homeowners to refinance loans or borrow more money to buy goods such as refrigerators.
Louisville, Kentucky-based GE Appliances accounted for about 13,000 of GE's 327,000 employees as of the end of last year.
``This isn't a piece of business at this point that has got much more incremental opportunity for GE,'' said Nicholas Heymann, an analyst at Sterne, Agee & Leach Inc. in New York, who has a ``hold'' rating on the stock.
Since unveiling his basic plan to shift out of economically sensitive sectors in December 2002, Immelt has divested more than $75 billion in GE businesses, including the plastics and insurance units, while making more than $50 billion in purchases in faster-growing areas such as water treatment and aviation. Investors and analysts have been asking ever since whether he planned to shed appliances and the light-bulb unit.
In December 2007, Immelt put the U.S. private-label credit card division on the block and is also selling the consumer finance unit in Japan, called Lake.
Earnings Surprise
GE's shares fell 13 percent, the most in two decades, on April 11 after Immelt reported a 12 percent decline in first- quarter earnings and said annual profit would trail his $2.42-a- share target. GE changed its forecast to $2.20 to $2.30 a share.
Welch told the GE-owned CNBC network that the surprise had jeopardized Immelt's ``credibility'' and later followed up to reiterate his support for the CEO. Welch had divested the small- appliance business, which made products such as toasters, and consumer electronics in the 1980s.
Since its inception in 1892 through the merger of the Edison Electric Co. and the Thomson Houston Co., GE was usually first to introduce appliances, from the room air conditioner to the two- door refrigerator-freezer combination, according to its Web site.
In 1928, GE introduced the Calrod electric range and about 19 years later came out with the first completely automatic clothes washer. In 1969, it introduced the first side-by-side refrigerator-freezer with an ice and water dispenser in the door.
Valuation
A sale would continue consolidation in the U.S. appliance industry and provide a possible vehicle for overseas companies looking to grab a larger share of the U.S. market.
Sterne Agee's Heymann told Bloomberg Television today he expects the sale may fetch about 9 times earnings before interest, taxes, depreciation and amortization, or about $6.5 billion. Goldman Sachs analyst Deane Dray, in a research note, said reported estimates of a possible value for the deal range from 8 to 12 times Ebitda. Dray rates the stock as ``neutral.''
The biggest recent acquisition of an appliance company was Whirlpool Corp.'s purchase of Maytag Corp. in 2006, creating the world's biggest appliance maker. The final sales price excluding assumed debt was $1.68 billion, or about 8.4 times Maytag's Ebitda in its final four quarters, according to Bloomberg calculations.
Appliance Makers
Haier Group, China's biggest appliance maker, was one of the unsuccessful suitors in the bidding for Maytag. South Korea's LG Electronics Inc. and GE said in February they would share patents on cooking appliances and refrigerators. Sally Lee, a spokeswoman for Seoul-based LG Electronics, declined to comment on the GE report, as did Zhao Rui, a spokeswoman at Haier Group in Qingdao.
``Haier would definitely be interested because they've been trying for years to get a bigger share of the U.S. market,'' said Zhang Xiaoga, an analyst at Orient Securities Co. in Shanghai. He has an ``add'' rating on the company's Qingdao Haier Co. refrigerator and air conditioning unit listed in Shanghai.
Stockholm-based Electrolux AB, the maker of Frigidaire appliances, in April reported its first quarterly loss in more than two years because of the slowdown in the U.S. Electrolux spent 120 million kronor ($20 million) in the first quarter to introduce new products in the U.S.
Royal Philips Electronics NV, Europe's largest consumer- electronics maker, has said it is looking for acquisitions to build its appliances division. The company raised 680 million euros ($1.05 billion) earlier this year when it sold a stake in its liquid-crystal display venture with LG.
Wind Power From Boone Pickens and GE
T. Boone Pickens confirmed Thursday that his Mesa Power outfit is placing an order for 667 wind turbines with General Electric starting in the middle of 2010," he said on CNBC's Squawk Box. The initial order with GE will be worth about $2 billion.
"Oil is phasing out, and renewables are coming in. ... I wanted to be in on it," the legendary oil man said. "We'll start to receive the turbines ... starting in the middle of 2010. ... It'll be $8 billion (worth of) turbines, and about $2 billion (in) transmission ... it'll probably even go over $10 billion." The wind farm would produce 1,000 megawatts of electricity, enough to power about 300,000 homes. By 2014, Pickens has said he wants to have 4,000 MW of wind. Earlier in the year, Pickens indicated he was willing to back wind projects to the tune of $10 billion.
Monday, April 14, 2008
Hold On To GE
This is another great time to buy a great company at discounted price. (Tim)
By ANDREW BARY
GENERAL ELECTRIC'S FIRST-QUARTER PROFIT SHORTFALL FRIDAY shocked Wall Street, embarrassed the company and hurt the credibility of CEO Jeff Immelt. But it doesn't kill the investment case for the company, whose shares now trade about where they stood a decade ago.
GE shares (ticker: GE) tumbled 4.70 points Friday to 32.05 -- a 13% decline and the worst one-day percentage drop in the stock since the 1987 market crash. The plunge is understandable, since GE's profits rarely fall short of the Street's expectations and the first-quarter profit miss was significant. GE earned 44 cents from operations in the period, down 8% from 48 cents in the year-earlier period, and seven cents below the consensus estimate of 51 cents.
GE now expects to earn $2.20 to $2.30 a share in 2008, below the prior consensus of $2.43. The new guidance from GE calls for zero to 5% growth in profits relative to the $2.20 that the company earned last year, which was up 18% from 2006.
A chastened Immelt said he was "disappointed" with the results, which largely reflect a shortfall at GE's huge financial-services unit, General Electric Capital Services. The earnings-miss came less than a month after Immelt reaffirmed GE's '08 guidance of at least 10% earnings growth, and six weeks after he personally spent $5 million to buy GE shares in the open market at about 33 a share.
The GE news, released before trading opened Friday, rocked the stock market as investors worried about the global impact of a slowing U.S. economy and touchy conditions in the credit markets. Investors wondered: "If GE got stung, how will lesser companies fare?"
The Dow Jones industrials fell 257, to 12,325 Friday, while the Standard & Poor's 500 index declined 28 points, to 1333. About 20% of the S&P 500 drop was driven by GE's loss, which sliced $47 billion from its market value, now $320 billion.
GE now trades for a reasonable 14.2 times estimated 2008 profits of $2.25 a share, using the midpoint of the current guidance. It's just 13 times estimated 2009 profits of $2.50 a share. Our 2009 estimate assumes 10% to 11% earnings growth next year, off a base of $2.25. GE has a secure, bond-like dividend yield of 3.9%.
General Electric is one of the best plays on the global-infrastructure boom, due to its strength in gas and wind turbines, jet engines and locomotives. Its infrastructure division, which includes these businesses, generated 23% revenue growth and 17% profit growth in the first quarter -- the brightest spot for the company. This division, which accounts for 40% of GE's earnings, experienced 11% order growth in the period.
BEFORE FRIDAY'S SURPRISE, bullish Street analysts looked for GE shares to trade into the low- to mid-40s in the next year. That might not happen, given the reduced profit outlook. A move to 40 doesn't seem impossible, however, if GE can meet its reduced profit guidance for 2008 and stays on track to earn $2.50 a share in 2009. If GE rises to 40, investors would get a total return, including dividends, of almost 30%.
GE's risk/reward ratio looks pretty good. Even if profit guidance for 2008 falls further -- to say, $2 a share -- downside in the stock probably isn't much lower than 28. That said, Barron's has been overly optimistic on GE, most recently in a cover story when the stock stood at 37 ("GE's Moment," June 4, 2007).
Some Street analysts are souring on GE, including Citigroup's Jeff Sprague, who cut his rating to Hold from Buy on Friday and reduced his price target to 36 from 45. In a report titled "If GE Can't Outshine Now, When?" Sprague wrote that "evidence is mounting that GE is too big and complex to manage effectively. At a minimum, we appear stuck in a framework where something always is underperforming, detracting from the positives in the portfolio."
The big frustration on Wall Street is that GE's powerhouse infrastructure business is being offset by its financial-services arm. GE Capital contributes about 40% of GE's profits. Setbacks in GE Capital's real-estate, commercial and consumer-finance businesses were the main reasons for the first-quarter profit miss. Much of the weakness surfaced at the end of March, surprising Immelt and GE brass.
Pressure is apt to build on GE to shed certain businesses, including real estate and consumer finance, as well as NBC Universal. NBCU, which includes NBC and the Bravo cable network, had disappointing profit growth of 3% in the first quarter. NBCU has no clear connection with the rest of GE, but the benefits of a sale are dubious, if only because entertainment companies are out of favor on Wall Street. Given the low valuations of Time Warner (TWX), Disney (DIS) and CBS (CBS), GE might not get the $40 billion price that has been put on NBCU.
The Bottom Line
If GE can meet its reduced profit guidance for '08 and stay on track in '09, its shares could rebound to 40, for a total return of almost 30%.
The bear case for GE is that GE Capital will continue to suffer from weakening credit conditions, and the growth in GE's infrastructure businesses will slow. GE's price/earnings ratio is about the same as that of United Technologies (UTX). Bears argue GE is fully priced, given its reliance on financial businesses that get accorded low P/E ratios in the stock market.
In Immelt's annual letter to shareholders, he suggested that GE might be a "perfect investment" for today's challenging business and financial environment. Friday's news rendered that an overstatement, but GE remains one of the great global businesses and a company, in Immelt's words, that is "built to perform in good times and bad." One disappointing quarter shouldn't change all that.
By ANDREW BARY
GENERAL ELECTRIC'S FIRST-QUARTER PROFIT SHORTFALL FRIDAY shocked Wall Street, embarrassed the company and hurt the credibility of CEO Jeff Immelt. But it doesn't kill the investment case for the company, whose shares now trade about where they stood a decade ago.
GE shares (ticker: GE) tumbled 4.70 points Friday to 32.05 -- a 13% decline and the worst one-day percentage drop in the stock since the 1987 market crash. The plunge is understandable, since GE's profits rarely fall short of the Street's expectations and the first-quarter profit miss was significant. GE earned 44 cents from operations in the period, down 8% from 48 cents in the year-earlier period, and seven cents below the consensus estimate of 51 cents.
GE now expects to earn $2.20 to $2.30 a share in 2008, below the prior consensus of $2.43. The new guidance from GE calls for zero to 5% growth in profits relative to the $2.20 that the company earned last year, which was up 18% from 2006.
A chastened Immelt said he was "disappointed" with the results, which largely reflect a shortfall at GE's huge financial-services unit, General Electric Capital Services. The earnings-miss came less than a month after Immelt reaffirmed GE's '08 guidance of at least 10% earnings growth, and six weeks after he personally spent $5 million to buy GE shares in the open market at about 33 a share.
The GE news, released before trading opened Friday, rocked the stock market as investors worried about the global impact of a slowing U.S. economy and touchy conditions in the credit markets. Investors wondered: "If GE got stung, how will lesser companies fare?"
The Dow Jones industrials fell 257, to 12,325 Friday, while the Standard & Poor's 500 index declined 28 points, to 1333. About 20% of the S&P 500 drop was driven by GE's loss, which sliced $47 billion from its market value, now $320 billion.
GE now trades for a reasonable 14.2 times estimated 2008 profits of $2.25 a share, using the midpoint of the current guidance. It's just 13 times estimated 2009 profits of $2.50 a share. Our 2009 estimate assumes 10% to 11% earnings growth next year, off a base of $2.25. GE has a secure, bond-like dividend yield of 3.9%.
General Electric is one of the best plays on the global-infrastructure boom, due to its strength in gas and wind turbines, jet engines and locomotives. Its infrastructure division, which includes these businesses, generated 23% revenue growth and 17% profit growth in the first quarter -- the brightest spot for the company. This division, which accounts for 40% of GE's earnings, experienced 11% order growth in the period.
BEFORE FRIDAY'S SURPRISE, bullish Street analysts looked for GE shares to trade into the low- to mid-40s in the next year. That might not happen, given the reduced profit outlook. A move to 40 doesn't seem impossible, however, if GE can meet its reduced profit guidance for 2008 and stays on track to earn $2.50 a share in 2009. If GE rises to 40, investors would get a total return, including dividends, of almost 30%.
GE's risk/reward ratio looks pretty good. Even if profit guidance for 2008 falls further -- to say, $2 a share -- downside in the stock probably isn't much lower than 28. That said, Barron's has been overly optimistic on GE, most recently in a cover story when the stock stood at 37 ("GE's Moment," June 4, 2007).
Some Street analysts are souring on GE, including Citigroup's Jeff Sprague, who cut his rating to Hold from Buy on Friday and reduced his price target to 36 from 45. In a report titled "If GE Can't Outshine Now, When?" Sprague wrote that "evidence is mounting that GE is too big and complex to manage effectively. At a minimum, we appear stuck in a framework where something always is underperforming, detracting from the positives in the portfolio."
The big frustration on Wall Street is that GE's powerhouse infrastructure business is being offset by its financial-services arm. GE Capital contributes about 40% of GE's profits. Setbacks in GE Capital's real-estate, commercial and consumer-finance businesses were the main reasons for the first-quarter profit miss. Much of the weakness surfaced at the end of March, surprising Immelt and GE brass.
Pressure is apt to build on GE to shed certain businesses, including real estate and consumer finance, as well as NBC Universal. NBCU, which includes NBC and the Bravo cable network, had disappointing profit growth of 3% in the first quarter. NBCU has no clear connection with the rest of GE, but the benefits of a sale are dubious, if only because entertainment companies are out of favor on Wall Street. Given the low valuations of Time Warner (TWX), Disney (DIS) and CBS (CBS), GE might not get the $40 billion price that has been put on NBCU.
The Bottom Line
If GE can meet its reduced profit guidance for '08 and stay on track in '09, its shares could rebound to 40, for a total return of almost 30%.
The bear case for GE is that GE Capital will continue to suffer from weakening credit conditions, and the growth in GE's infrastructure businesses will slow. GE's price/earnings ratio is about the same as that of United Technologies (UTX). Bears argue GE is fully priced, given its reliance on financial businesses that get accorded low P/E ratios in the stock market.
In Immelt's annual letter to shareholders, he suggested that GE might be a "perfect investment" for today's challenging business and financial environment. Friday's news rendered that an overstatement, but GE remains one of the great global businesses and a company, in Immelt's words, that is "built to perform in good times and bad." One disappointing quarter shouldn't change all that.
Saturday, April 12, 2008
GE
April 11, 2008, 4:47 pm
Four at Four: All GE, All the Time
Posted by David Gaffen
Sometimes General Electric Co. is a proxy for the stock market. Friday, GE was the stock market. Shares ended the day lower by 12.8%, the worst one-day performance for the stock since Oct. 19, 1987, as more than 335 million shares traded, or about 10% of the listed volume on the Big Board. The sharp decline indicates that this was a massive surprise to investors, and while the company has a reputation of deftly hitting earnings, quarter after quarter, the problems in the credit markets lead one to believe that perhaps this should not have been a surprise. CEO Jeffrey Immelt, speaking on the firm’s conference call, said that “the $500 million plus in commercial finance that we missed in the quarter fundamentally took place with really the inability to do transactions in the last two weeks that we normally could get done and marks that basically we do at the end of the quarter that basically all went negative.” In other words, just like a lot of other financial companies that rely on borrowing money to make certain loans that could not later be sold. “It’s a huge lender and they fund these loans through commercial paper,” says George Feiger, CEO of Contango Capital Advisors, the wealth management arm of Zions Bancorporation. “Why should it be better off than Merrill Lynch or Citigroup or anybody? Essentially, it’s a collateralized lender on a huge scale. Nobody should be surprised GE is having the same mark-to-market problems that every other CLO is having.”
Four at Four: All GE, All the Time
Posted by David Gaffen
Sometimes General Electric Co. is a proxy for the stock market. Friday, GE was the stock market. Shares ended the day lower by 12.8%, the worst one-day performance for the stock since Oct. 19, 1987, as more than 335 million shares traded, or about 10% of the listed volume on the Big Board. The sharp decline indicates that this was a massive surprise to investors, and while the company has a reputation of deftly hitting earnings, quarter after quarter, the problems in the credit markets lead one to believe that perhaps this should not have been a surprise. CEO Jeffrey Immelt, speaking on the firm’s conference call, said that “the $500 million plus in commercial finance that we missed in the quarter fundamentally took place with really the inability to do transactions in the last two weeks that we normally could get done and marks that basically we do at the end of the quarter that basically all went negative.” In other words, just like a lot of other financial companies that rely on borrowing money to make certain loans that could not later be sold. “It’s a huge lender and they fund these loans through commercial paper,” says George Feiger, CEO of Contango Capital Advisors, the wealth management arm of Zions Bancorporation. “Why should it be better off than Merrill Lynch or Citigroup or anybody? Essentially, it’s a collateralized lender on a huge scale. Nobody should be surprised GE is having the same mark-to-market problems that every other CLO is having.”
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