|Bid||7.830 x 34100|
|Ask||7.840 x 36200|
|Day's Range||7.730 - 7.930|
|52 Week Range||7.530 - 19.390|
|Beta (3Y Monthly)||0.60|
|PE Ratio (TTM)||N/A|
|Earnings Date||Jan 22, 2019 - Jan 28, 2019|
|Forward Dividend & Yield||0.04 (0.50%)|
|1y Target Est||13.03|
A year ago, I wrote about the worrying increase in leverage among America’s blue chips caused by share repurchases (“Hollowed-out blue chips are the next subprime”). Today I want to return to the subject, because the travails of General Electric are a reliable signal of the trouble ahead for the large corporate sector of the U.S. economy. The share price is now $8.60, so the company has liquidated between $23 billion and $29 billion of its shareholders’ money on this utterly futile activity alone. Since the highest net income recorded by the company during those years was $8.8 billion in 2016, with 2015 and 2017 recording a loss, it has managed to lose more on its share repurchases during those three years than it made in operations, by a substantial margin.
If a technology is fundamentally disruptive enough, that fact will always overwhelm the noise of the day about valuation.
A recent UBS survey indicated that 92% of investors are "bearish" or "very bearish" about the Boston-based industrial conglomerate, as outlined by Barron's. Even deep value investors have avoided the "buy on the dip mentality" for GE, as shares have lost roughly 30% of their value over the recent 30 days. The downbeat sentiment stems from a long list of concerns about GE, including fears that GE Capital will sink the company, that its power-generation business will fail to turnaround, and that it will need to raise equity at depressed prices. In a note to clients on Friday, Goldman Sachs estimated that GE will need to fill a $20 billion funding gap for its lending arm by 2020, through measures such as additional asset sales, as outlined by Business Insider.
If fully tapped, the two main credit facilities would rank as the largest loans to any U.S. company that go beyond next year, data compiled by Bloomberg show. Such commitments can make up an outsize chunk of a bank’s portfolio.
As with the stock slump in late January, premiums on investment-grade corporate bonds compared with government debt have jumped the world over in recent weeks. Since 1994, “the Fed only responds to stock market sell-offs that happen at the same time as widening credit spreads or growth significantly below potential,” they said.
The strange and cumbersome corporate beast that is the industrial conglomerate must adapt — or die. In the limelight is Ulrich Spiesshofer, ABB’s Germany-born boss since 2013. As chief executive he has cut costs and focused the group, which has annual sales of $34bn, around four pillars: industrial automation and electrification, as well as robotics and power grids.
Holders of General Electric bonds are preparing for one of the world’s biggest borrowers to be downgraded to junk. To get a sense of what that might do to the markets, take a look back to the turmoil caused by the 2005 downgrades of General Motors and Ford—but worry that this time it might be worse because so many companies have been on a debt binge. Back in 2005 it was easier for the overall market to shrug off the troubles in credit, because corporate debt—excluding the banks—was under control, with the boom in borrowing linked instead to mortgages.
It’s been a brutal year for General Electric (NYSE:GE). When GE stock was clinging to $10, we warned investors not to stick around if it got below that mark. General Electric slashed its dividend more than 90% down to just a penny per share, while missing on earnings and revenue expectations.
IBM stock touched a nine-year low at one point before a modest rebound. At the end of October, IBM agreed to acquire Red Hat (NYSE:RHT) for $34 billion in cash, an acquisition the market appears to dislike. Neither stock, of course, has seen declines like that of International Business Machines stock.
A global engine supplier headquartered in southwest Ohio has landed a new contract with the U.S. and foreign governments.
Drill into the S&P 500 and it’s evident that the swoon that began in September isn’t just a tale of formerly high-flying tech heavyweights cast down. The sell-off in equities has deepened after the biggest weekly deterioration in U.S. investment grade spreads since 2016 and the longest losing streak for high-yield debt in more than a year. More and more, stocks and bonds are both being whipped around by creeping concern about the creditworthiness of American businesses as the expansion grows ever longer and credit conditions tighten.
Investors yanked more than $224 million from the $7.3 billion SPDR Bloomberg Barclays High Yield Bond ETF, ticker JNK, Monday, and more than $72 million from the $3 billion SPDR Bloomberg Barclays Short Term High Yield Bond ETF, or SJNK. “When I see credit spreads getting wider and large outflows, it tells me ‘risk off’ right now,” said Christian Fromhertz, chief executive officer of Tribeca Trade Group, who monitors credit markets to assess risk.
If pressure began building last month, things blew up last week: High-grade bond spreads widened the most in nearly two years, premiums paid for junk bonds jumped the most in almost two years, and the prices of leveraged loans sank to the lowest since 2016. “It’s going to be a pretty sloppy market through year-end,” said Scott Kimball, a portfolio manager at BMO Global Asset Management in Miami. Investors are concerned the company’s financial woes and massive debt pile may be the harbingers of broader problems in the corporate credit market amid rising rates and possible slower growth.
GE’s gas turbines and services will be housed in one unit, while products that serve healthier parts of the power market, such as grid solutions, will be put in another. On Monday, GE announced that the CEO of GE Power, Russell Stokes, will now lead the latter business, while the head of GE’s power-services arm, Scott Strazik, will become CEO of the gas-turbine operations. Former GE Vice Chairman John Rice will return and become chairman of the gas-turbine unit.
moves forward with its plan to reorganize its troubled Power business into two businesses, one of former Chief Executive Officer Jeff Immelt's top executives is returning to help oversee the restructuring. Boston-based GE announced on Monday, Nov. 19, that John Rice, who spent 39 years at the company, will serve as Chairman of the GE Gas Power business, a newly created position. Immelt's successor John Flannery praised Rice in his retirement announcement, saying Rice "is known and respected by government leaders and customers in all of GE's global market for his tireless energy and relentless focus on helping solve their challenges.
Yesterday, General Electric (GE) announced a leadership shuffle to help turn around its ailing power business. The management shuffle includes bringing back veteran GE executive John Rice from retirement to be the chair of the newly structured gas power business. Apart from bringing back Rice, Culp made Scott Strazik CEO of GE Gas Power.
General Electric’s (GE) Healthcare segment, which offers medical imaging and information technologies, biopharmaceutical manufacturing technologies, and patient monitoring systems, is one of the company’s better-performing units and is the fourth-largest contributor to its total revenue.
Japanese prosecutors jailed auto-industry titan Ghosn, accusing him of underreporting his pay. The move set off a leadership crisis at the Renault-Nissan-Mitsubishi alliance. U.S. stocks lurched lower, deepening a slump that has shaken many investors’ confidence in leading tech firms.
One photo to start: Thanks to the DD’s London readers who made it to our talk with Tony Pullinger and Charlie Crawshay from the UK’s Takeover Panel last week. Carlos Ghosn has always liked to make a grand entrance, akin to a visiting head of state, rather than a trip from a corporate officer.
One of Jeff Immelt’s top lieutenants is returning to General Electric Co. to help oversee a restructuring at its problematic power division and provide some stability to the conglomerate’s anxious customers. The company Monday said John Rice, who spent some four decades at GE, would become chairman of its gas power business, a newly created position. Mr. Rice, 63 years old, had retired last year after Mr. Immelt’s exit.
The CDX investment-grade index, a measure of the cost of default protection for high-grade bonds, surged during the trading day Monday and at one point breached the previous week’s peak before closing 3.68 percent higher. The index rose as much as 13 percent last week amid broad credit market volatility. Guggenheim Partners Chief Investment Officer Scott Minerd last Tuesday said in a Tweet the sell-off in GE bonds was not isolated and that the “slide and collapse in investment grade debt has begun.” Bank of America Corp. analyst Hans Mikkelsen took a different stance, writing in a note that GE’s problems will remain mostly confined to the company.
General Electric’s (GE) stock price keeps falling. The stock fell nearly 2% on November 16, its 11th loss in the previous 13 sessions. The stock closed trading at $8.02 before touching a nine-year low of $7.73.
The changes mark another step in new GE Chief Executive Officer Larry Culp's urgent effort to reduce heavy debt and restore profits at the 126-year-old, Boston-based conglomerate. It also highlights the problems at GE Power. Culp reorganized the division three weeks ago, separating its gas-turbine business from units that make coal- and nuclear-fueled power plants, power grids and other equipment.