Category Archives: GE – General Electric

Too Many Bears, Not Enough Bulls (GE in January 2018)

Looking at General Electric gets a little discouraging.

GE had a decent earnings report earlier this week, but that was quickly overshadowed by news of the Securities and Exchange Commission probe into its recent insurance charge. Still, the stock had managed to stay above $16 since they were released.

Analysts see a levered company with weak free cash flow levels and a management team stuck between a rock and a hard place.

MADISON.COM sees 4 Key Takeaways From General Electric Company Earnings: 2 Good and 2 Bad.

Having updated investors on its turnaround strategy on a presentation in November, it was important for CEO John Flannery to demonstrate that a line has been drawn in the sand, notably on its ailing power segment, but the fourth-quarter earnings report failed to do this.

the SEC is also investigating GE’s long-term service agreements (LTSA) and how the company books revenue on them. GE has LTSAs in place for things like servicing power plants and jet engines, and it has the right to payment for products or services transferred to the customer. When these payments are unconditional, they go on the balance sheet as receivables, but when they involve some other obligation (excluding time), they are called contract assets.

In the case of GE, the company has been growing its contract assets — meaning revenue and earnings are booked before the company receives cash — and the SEC is now looking into how GE has been doing this. It’s an issue investors’ attention was drawn to after the first quarter of 2017 saw a $1 billion shortfall in cash flow generation. The worry is that the SEC might rule that GE’s revenue reporting might have inflated revenue and earnings via its contract assets, particularly in its power segment.

Some of the nuances of GE’s first-quarter earnings were revealed on the January 16th press release regarding the aforementioned insurance charge. From that press release, investors already knew that GE’s EPS would come at the low end of guidance of $1.05 to $1.10, so it was no surprise when a figure of $1.05 was reported. On a more positive note, just as previewed on the previous press release, industrial cash flow from operations (CFOA) for 2017 came in ahead of guidance of $7 billion, but it was surprisingly strong at $9.7 billion, suggesting Flannery’s efforts to improve cash flow generation are already bearing fruit.

However, power markets had been described as continuing “to be challenging” on the press release, and CEO of GE Power Russell Stokes added on the first-quarter earnings conference call: “We believe that total gigawatts awarded will be even softer than we thought in December, coming in below 35 gigawatts in 2017.”

To put this into context, back on the second-quarter 2017 earnings call, former CFO Jeff Bornstein outlined expectations for the power market to decline to 40 gigawatts in 2017 — clearly, GE underestimated the weakness of the power market in 2017, and management continued to do so even up to December 2017. Stokes went on to outline that he was “working to accelerate additional restructuring efforts in 2018 to support a market that could be as low as 30 gigawatts,” and the full impact of weakening end-market conditions remains to be seen on GE’s power segment.

A key part of Flannery’s strategic plan is to focus the business on power, aviation, and healthcare. The good news is that orders in non-power segments continue to impress. In a nutshell, GE is going to need the healthcare’s strong cash flows and growth from its aviation segment in order to support its ailing power segment while management tries to restructure it.

On a headline basis, GE’s earnings came in pretty much in line with previous guidance. and there was no change to the 2018 outlook for EPS and cash flow. That’s relatively good news. However, the SEC investigation into contract assets is a concern, and power’s ongoing end-market deterioration suggests it’s going to take time to turn the segment around. Fortunately, aviation and healthcare continue to do well, and Flannery seems to be making progress on his aim to change the operational focus onto cash-flow generation.

Not much is going right for General Electric Co. these days. Except, that is, renewable energy.

The business is a rare bright spot: it’s one of only two GE units where revenue grew over the last four quarters.

Renewable energy was the fastest growing unit for GE over the last four quarters.

Today, for the first day in a long time, our Featured Image is aboit Renewable Energy!!!

General Electric Co (GE) Moves Lower on Volume Spike for January 24

equities.com

General Electric Co (GE) traded on unusually high volume on Jan. 24, as the stock lost 2.66% to close at $16.44. On the day, General Electric Co saw 165.7 million shares trade hands on 355,382 trades. Considering that the stock averages only a daily volume of 89.8 million shares a day over the last month, this represents a pretty significant bump in volume over the norm.

Generally speaking, when a stock experiences a sudden spike in trading volume, it may be seen as a bullish signal for investors. An increase in volume means more market awareness for the company, potentially setting up a more meaningful move in stock price. The added volume also provides a level of support and stability for price advances.

The stock has traded between $30.59 and $15.80 over the last 52-weeks, its 50-day SMA is now $17.94, and its 200-day SMA $23.69. General Electric Co has a P/B ratio of 1.87. It also has a P/E ratio of 21.4.

General Electric Co is a digital industrial company. It operates in various segments, including power and water, oil and gas, energy management, aviation, healthcare, transportation, appliances and lighting, and more.

Headquartered in Boston, MA, General Electric Co has 295,000 employees and is currently under the leadership of CEO John L. Flannery.

Please note that we have “improved” the Featured Image from the “night-time” view to at least a “day time” view. Holding up still on pictures of a “digital industrial company”.

GE’s Meltdown Might Be the Best Thing to Happen to It

Fortune.com

The Great General Electric Debacle of 2017 continued into 2018 as the company on Wednesday reported fourth-quarter earnings that fell short of analysts’ expectations. The dismal details: earnings per share of $0.27 net of special charges vs. a Wall Street estimate of $0.29; revenue of $31.4 billion vs. an estimate of $34 billion. This from a company once famed for never, ever missing Wall Street earnings estimates. GE was the worst performing stock in the Dow last year, and it has continued to fall in 2018.

Yet GE’s meltdown may be the best thing that could have happened to the company. That’s because it has forced management to propose a long-unutterable possibility: that GE could be broken up. In truth it should have been broken up long ago. Now things are so bad that it’s hard to see a significant improvement of this sorry mess otherwise.

The trouble with GE is simple and systemic. It’s a typical crummy conglomerate. Its transformation into a conglomerate began after World War II, when it expanded into businesses unrelated to electricity or each other—missiles, computers, satellites, coal mining, and many others. Conglomerates were all the rage in the 1960s, but as they reliably underperformed the market, most of them, such as ITT, Litton, and LTV, got taken apart. Not GE. The 1970s were a dismal decade for stocks, yet GE did even worse than the market, amplifying cries to bust up this company.

Then something happened. In 1981 Jack Welch became CEO, and during his 20-year tenure the company outperformed the market so spectacularly that talk of a breakup faded away. Yes, he ran the place during a historically great bull market. But GE performed much, much better than the market. Then, after he stepped down, GE reverted to its usual market-trailing performance. It again revealed its true character as a crummy conglomerate.

How crummy? If you had invested $100 in the S&P 500 in 1945, you’d have $245,738 today. But if you’d invested $100 in GE, you’d have only $144,478 including dividends, even with the rocket boost to the stock contributed by Welch. And without that boost? If GE had merely matched the S&P 500 during his tenure, which would still have beaten GE’s average performance under the post-war CEOs before and after him, then you’d have only $43,098.

It’s true that not all conglomerates perform terribly. The strongest counterexample is Berkshire Hathaway, which Warren Buffett happily calls “a sprawling conglomerate.” But this proves little. The lesson seems to be that a conglomerate with a genius CEO like Buffett or Welch can perform terrifically. Unfortunately, a strategy that requires a genius CEO is not a sustainable strategy.

Some analysts argue that GE’s businesses are so entangled financially that separating them would cost more than it’s worth. That analysis fails to value the entrepreneurial energy that can get unleashed in a breakup. Separating GE into three companies—jet engines, power systems, health care—would be a gamble for sure. But with the stock in a hole and management offering no clear plan for recovery, it’s finally time to face reality. GE has no reason for existing in its present form. Its component businesses should be set free.

GE warns 2018 could be even worse than it expected for its embattled power business

“We said ’17 issues would carry over into ’18 in power, but it’s still a good franchise in power,” GE chief executive John Flannery said in a conference call on Wednesday.

The market for GE’s pricey power turbines has been weak due to the growth of renewable energy supply from wind and solar farms.

In 2018, GE is bracing for its worst year of gas turbine installations in about 15 years.

GE is under SEC investigation. Kick them when they are down.

General Electric is under investigation by the Securities and Exchange Commission.

GE said on Wednesday that regulators are investigating a $6.2 billion insurance loss that the company revealed last week. The disclosure is a new and potentially much more serious problem for a company already reeling from missteps and questionable management decisions.

The SEC is also investigating the company’s accounting, chief financial officer Jamie Miller told analysts during a conference call. Specifically, she said the agency is looking into “revenue recognition and controls” for the company’s long-term service agreements.

“We are cooperating fully with the investigation, which is in very early stages,” Miller said.

GE said it will restate its 2016 and 2017 quarterly numbers to reflect new accounting standards.

YES we are aware of the DAMAGE to General Electric from the “WONDERFULL” world of Financial Services, Mortgages, Insurance, and GE MONEY. But the SEC was “sleeping at the switch” when all this stuff was going on.

General Electric has woken up from the dream of “FINANCIAL SERVICES”

It will all be history, soon?

Until then, I will continue to use my NIGHT TIME picture of Schenectady, New York when 45,000 employees worked there. NONE doing “FINANCIAL SERVICES”

General Electric falls short in fourth quarter but offers stronger 2018 outlook

General Electric reported fourth-quarter earnings that missed Wall Street estimates.

GE says cash performance in the latest period was better than expected.

The company removed $1.7 billion in structural costs in 2017, and its targeting more than $2 billion in 2018.

General Electric fell short of Wall Street’s expectations as it reported its fourth-quarter earnings Wednesday but offered up a stronger than expected outlook for 2018.

GE swung to a loss from continuing operations of $10.01 billion, or $1.15 per share, in the quarter ended Dec. 31. In the year-ago period, GE had earned $3.48 billion, or 39 cents per share.

Stripping out charges, GE earned 27 cents a share.

Revenue fell 5 percent to $31.40 billion from $33.09 billion a year ago.

GE said its industrial businesses generated adjusted cash flow of $7.76 billion. That figure excludes taxes on deals, the costs of GE’s pension plan and its oil and gas business. It includes a dividend from its ownership of Baker Hughes.

Shares of GE rose nearly 6 percent in premarket trading Wednesday. In recent days, the stock has been under pressure, falling to nearly $16, its lowest in six years.

“Our results this quarter demonstrate some of the early progress we are seeing from our key initiatives,” Flannery said in the company’s press release. “The team is focused on operational execution, capital allocation and deep cost reduction to position us for continued improvement in 2018.”

“2018 is a critical year for us, and we intend to continue demonstrating in the coming quarters that our new approach is working and the organization is changing,” Flannery said on a conference call with investors.

The knife has continued to fall unabated at GE, with 2018 bringing additional nasty updates for investors. The company announced on Jan. 16 it would take a $6.2 billion charge in the fourth quarter after a review of its GE Capital insurance portfolio.

The company’s stock has declined more than 43 percent over the past year as of Monday’s close, making it the worst performing stock among the Dow Jones industrial average.

Beware the ‘black hole’ that is GE, market watcher warns

From CNBC Trading Nation

The stock market is in the midst of one of the hottest bull run’s ever, but General Electric is being left out in the cold.

The Dow’s oldest component has had a rough go at it. On Wednesday, it suffered its worst three-day decline since mid-November.

For one market watcher, the reason for the sell-off is clear: GE’s opaque finances across its portfolio of businesses.

“I would not be rushing to go buy it simply because of the black hole of the financials side,” Boris Schlossberg of BK Asset Management told CNBC’s “Trading Nation” on Wednesday. To Schlossberg, the uncertainty of what liabilities hide on its balance sheet is worrisome.

Is there any relief in sight for GE? Is there any relief in sight for GE?
4:29 PM ET Wed, 17 Jan 2018 | 02:59
The stock market is in the midst of one of the hottest bull run’s ever, but General Electric is being left out in the cold.

The Dow’s oldest component has had a rough go at it. On Wednesday, it suffered its worst three-day decline since mid-November.

For one market watcher, the reason for the sell-off is clear: GE’s opaque finances across its portfolio of businesses.

“I would not be rushing to go buy it simply because of the black hole of the financials side,” Boris Schlossberg of BK Asset Management told CNBC’s “Trading Nation” on Wednesday. To Schlossberg, the uncertainty of what liabilities hide on its balance sheet is worrisome.

GE’s troubled finances were made a little more transparent to investors on Tuesday after the company announced plans to book a $6.2 billion after-tax charge for its insurance business in its fourth quarter. John Flannery, CEO of GE since August, told investors he was “disappointed” in the charge stemming from its “legacy portfolio.”

“There’s still a lot of unknowns right now and, if anything, these write-offs actually highlight just how much wasn’t known up until now,” said Gina Sanchez of Chantico Global, who also holds a pessimistic outlook on GE.

The GE Capital subsidiary said it will suspend its dividend to GE for the foreseeable future. GE’s financials businesses are expected to be a red mark on GE’s balance sheet over the next few years. Analysts forecast a drop in year-over-year revenue and earnings in the GE Capital core segment in 2017 and 2018.

Even a recent surge in crude oil is not enough for Sanchez to change her view on GE shares. Oil’s gains, which should be “wind in their sails” for GE’s oil and gas operations, will not give enough of a lift to the company as a whole, Sanchez said. GE’s oil and gas operations make up roughly one-tenth of the company’s total revenue and earnings.

GE’s recent operational performance should become a little clearer when the company reports earnings. Fourth-quarter earnings are expected to dip for the third year in a row, falling to 30 cents a share, roughly one-third lower than in 2016. Sales are expected to rise by 2 percent. GE is set to report on its fourth quarter on Wednesday.

Until then, GE shares are taking a hit — over the past three days, its stock has plummeted almost 9 percent. GE’s shares have not seen such a weak performance since mid-November with news the company would cut its dividend shocked markets. That marked just its second dividend cut since the Great Depression.

The majority of brokers surveyed by FactSet have a hold rating on the stock and a price target average of $20.71 a share, implying nearly 20 percent upside from Wednesday’s levels. Morningstar Equity Research has one of the highest price targets at $26 and Deutsche Bank one of the lowest at $15.

What are you doing with your GE position?
Buying
Holding
Selling
Praying

ANOTHER POORLY TIMED LARGE GE ACQUISITION

Guest article by Ken Kinlock

One of the major problems for a US company having manufacturing in France and other European countries is that you can’t layoff people to conform to market and industry changes.

GE’s acquisition of Alstrom is an excellent example. The market is declining but you can’t reduce the workforce. “Positions in France won’t be affected due to stipulations in an agreement when GE bought Alstom SA’s energy business in 2015, the GE spokesperson said.” Even worse, GE Power will add 1000 jobs in France to meet the agreement they made when the French government approved the deal. So, every other location will reduce employment while France increases, even when the market is declining. Does this make sense?

This reinforces my previous note that “GE has made many poor LARGE acquisitions over the past fifty years and Altrom has many of the same problems that Machine Bull acquisition had for GE and why it lost the computer game against IBM.

GE startup designs a less painful blood test

Schenectady Gazette

Scientists in Niskayuna developed crucial part of collection device

Getting blood drawn for medical testing may become quicker, less painful and more informal with new technology being developed by a General Electric startup.

The device developed by Drawbridge Health is usable by untrained personnel, takes a tiny amount of blood from a skin prick and stabilizes it so it will keep for days at room temperature until it can reach the testing lab. It’s a technology that could one day be available for in-home use by patients.

Today’s widely used blood-draw procedures require a trained phlebotomist to puncture the patient’s vein and draw one or more vials of blood in a clinical setting, before sending the vials, which must be kept cool, to a lab.

The new technology involves GE at a number of levels:

GE Ventures in Boston came up with the idea for the product, then created Drawbridge to make it a reality, with development help from engineers and scientists at GE Global Research and GE Healthcare. Drawbridge is now privately held and independent, but GE remains an investor.

The Drawbridge team designed the device to do the mechanical work of extracting blood.

Global Research scientists in Niskayuna developed the paperlike matrix that absorbs the blood and stabilizes it for the potentially lengthy wait for testing.

The device is undergoing review by the U.S. Food and Drug Administration.

“We expect to complete that process sometime next year,” said Risa Stack, who is managing director of new business creation for GE Ventures and also sits on Drawbridge’s board of directors.

Then the hard work begins: building market acceptance for the new device and capturing market share. Blood is drawn billions of times per year in the United States.

Drawbridge is talking to potential partners that already operate in the industry.

Stack has a long academic and professional background in the field but was born with one unique qualification for this project: a strong dislike of needles and a history of passing out during blood draws. She’ll often bring a book to distract herself when scheduled for a blood draw, and a candy bar to boost her blood sugar.

Drawbridge hasn’t named its device yet, nor released photos of it. But prototypes have been tested on volunteers including Stack, who found it noticeably less painful than the traditional venipuncture blood draw and also less painful than the fingertip-prick done for blood sugar monitoring.

The device withdraws less than a milliliter of blood. It can be used anywhere on the arm but is typically placed near the shoulder. Because it is not pulling blood from the vein, it does not require the skill of a phlebotomist, and it works well on patients with hard-to-find veins.

Making the blood tests easier, it is hoped, will allow for better tracking of medical conditions and response to therapy, saving time, money and even lives.

The Drawbridge device sends the blood into a cartridge, where the paperlike matrix stabilizes it within a few minutes. The cartridge is then removed for transport to a lab. The promise is that blood tests can be done on a more informal basis at more remote settings — and with less discomfort.

David Moore, a chemist who is the technology operations leader for the functional materials group at Global Research in Niskayuna, led the effort to develop the matrix.

It was essentially an adaptation of technology GE developed for the Life Sciences section of its Healthcare business. The collaborative nature of research efforts at Global Research allows for easy sharing of ideas and expertise across disciplines, technologies and businesses, Stack and Moore said.

Moore said the Drawbridge Health product gathers samples that can be tested in many ways, including for proteins, genetic material and biomarkers that would indicate a wide range of conditions and diseases.

“The possibilities are quite extensive,” he said, though the product is not envisioned as a forensic or substance-abuse test device at this point.

Stack said the device is part of a health care industry trend toward giving patients increased control over treatment and decreased time away from work or other activities for clinical settings.

Technology to allow quicker and/or easier blood tests has been in development and on the market for years. Many companies make finger-prick glucose testers for diabetes patients. Various apps allow smartphone-linked monitors to provide real-time blood-sugar data and, if needed, instructions or advice. Roche Diagnostics has a device that checks coagulents. CardioChek markets a cholesterol tester. Athelas is developing a device that does a 60-second check on cancer patients for an array of diseases. Silicon Valley startup Theranos has had a high-profile roller-coaster ride with its own finger-prick device that promised a battery of quick, inexpensive blood tests.

What makes Drawbridge different, GE Venutres said, is that the blood test is done in a traditional blood lab, with all the technology and infrastructure there, rather than in a portable consumer device.