GE - General Electric Company
| Previous Close | 11.66 |
| Open | 11.71 |
| Bid | 11.42 x 36200 |
| Ask | 11.43 x 36200 |
| Day's Range | 11.35 - 11.71 |
| 52 Week Range | 7.65 - 12.24 |
| Volume | 41,132,587 |
| Avg. Volume | 56,195,791 |
| Market Cap | 99.693B |
| Beta (5Y Monthly) | 1.17 |
| PE Ratio (TTM) | N/A |
| EPS (TTM) | -0.62 |
| Earnings Date | Jan 28, 2020 |
| Forward Dividend & Yield | 0.04 (0.34%) |
| Ex-Dividend Date | Dec 18, 2019 |
| 1y Target Est | 10.85 |
- Zacks
General Electric (GE) Reports Next Week: Wall Street Expects Earnings Growth
GE (GE) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.
- MarketWatch
GE's stock sinks to extend losing streak as Boeing's 737 MAX issues poses a risk ahead of earnings
Shares of General Electric Co. sank 1.2% in morning trading, putting them on track for a sixth straight loss, and 10th loss in 11 days, amid concerns over the fallout from Boeing Co. pushing out expectations for the return of its 737 MAX planes. Analyst Andrew Obin said Boeing's announcement on Tuesday "increases the likelihood" that the 737 MAX production pause is extended through the first half of 2020, which would impact GE since GE makes the 737 MAX's engines. Obin reiterated his neutral rating on GE's stock and his $12 price target. "In our 4Q19 GE preview, we highlighted 737 MAX issues as a potential risk for GE in 2020," Obin wrote in a note to clients. Both Boeing and GE are slated to report results on Jan. 29, before the opening bell. The stock has run up 27.2% over the past three months, but has lost 4.9% during its six-day losing streak, while Boeing shares have shed 9.0% and the Dow Jones Industrial Average has gained 9.0%. A 6-day losing streak for GE's stock would be the longest since the 7-day stretch of losses ended on Dec. 5.
- Barrons.com
GE Stock Has Soared Since October. Boeing’s 737 MAX Delays Could Put Its Rally at Risk.
One analyst called out “downside risks” for Boeing suppliers, including General Electric, Honeywell International, and Parker Hannifin.
- Benzinga
How 737 Max Delays Are Impacting General Electric
Boeing Co (NYSE: BA) shares are down 4% this week on reports the company has been telling customers its 737 Max likely won’t be cleared to fly until June or July, months later than it had previously expected. Obin said 737 Max suppliers are missing out on revenues while the grounding drags on. The good news for Boeing suppliers is that most of them have diversified businesses, with exposure to defense or other industrial customers.
- Zacks
Near-Term View Bleak for Diversified Operations Industry
Near-Term View Bleak for Diversified Operations Industry
- American City Business Journals
Mass. employers earn high marks in LGBTQ-friendly workplace index
Dozens of Massachusetts companies were among top-scoring employers for LGBTQ-inclusive workplace policies.
- Barrons.com
Boeing Will Borrow $10 Billion, a Report Says. Here Are 3 Ways It Might Spend the Money.
Boeing is set to borrow another $10 billion, according to Reuters, as the company’s 737 MAX drama drags on. Boeing doesn’t appear to have a cash crunch just yet, so what is the $10 billion for?
- Bloomberg
Davos Seeks a Better World, But Who's Going to Pay for It?
(Bloomberg Opinion) -- If investors want a better world, they’ll have to pay for it.The world’s uber-elite converged on Davos, Switzerland, on Tuesday for the World Economic Forum’s annual meeting. The group of more than 2,000 is worth an estimated $500 billion and includes at least 119 billionaires. This year’s theme is “Stakeholders for a Cohesive and Sustainable World” and includes panels such as “Averting a Climate Apocalypse” and “Balancing Domestic and Global Inequality,” so you can count on plenty of chatter about the world’s most pressing problems.Aside from the obvious point that no one wants to hear about wealth inequality and climate change from a gaggle of billionaires whose carbon footprint dwarfs that of an ordinary person, the gathering comes amid growing suspicions that many of the corporate titans expected at Davos aren’t just casual observers of the world’s ills but actively perpetuate them in the pursuit of profits. Corporate executives seem to be coming to that realization themselves. The Business Roundtable, an association of U.S. CEOs, abandoned the principle of shareholder primacy last August, pledging instead to “lead their companies for the benefit of all stakeholders,” including customers, employees, suppliers and communities. The move is an implicit — if not explicit — admission that, as my Bloomberg Opinion colleague Joe Nocera put it last week, “Shareholder value has caused much harm in the three decades since it became the core value of American capitalism: diabetics who can’t afford insulin; students ripped off by for-profit universities; patients gouged by hospital chains; and so much else.”That singular focus on profits has also been an undeniable windfall for shareholders of U.S. companies. Consider that from 1871 to 1979, earnings per share for the S&P 500 Index grew 3.4% a year, according to numbers compiled by Yale professor Robert Shiller. In the late 1970s and early 1980s, a new generation of executives, including most famously General Electric Co.’s Jack Welch, made profit maximization their single-minded priority. Since 1980, earnings have grown 5.6% a year.Earnings are the invisible hand that drive stock returns. The S&P 500 returned 11.8% a year during the four decades from 1980 to 2019. Of that, nearly half came from the 5.6% of earnings growth. Dividends contributed 3% and change in valuation kicked in the remaining 3.2%, as measured by change in the 12-month trailing price-to-earnings ratio. Earnings have been even more of a workhorse in recent years as dividend yields have declined and — contrary to popular perception — investors have been reluctant to pay more for stocks. Of the 13.6% annual return from the S&P 500 from 2010 to 2019, a whopping 10.2% came from earnings growth and just 3.4% came from dividends and change in valuation.It’s hard to see how that pace of earnings growth — and the return from stocks by extension — is sustainable if companies decide that shareholders are no longer their only concern. Sure, some efforts to broaden the base of stakeholders may contribute to future growth, or at least not detract from it. Germany, for example, has a decades-old tradition of co-determination in which workers are represented on corporate boards, and German companies have generated higher earnings growth than their U.S. counterparts since Germany enacted co-determination in 1976.But the scale of the problems contemplated at Davos this week is likely to require more drastic intervention. Taking on inequality is likely to mean retraining millions of workers for higher-value jobs and paying them accordingly. Confronting climate change will require significant spending on research and in some cases abandoning whole lines of business. Those costs will be borne by shareholders big and small, from the bigwigs gathered at Davos to university endowments to pension funds to ordinary retirement savers. And not just in the U.S. The swell of protest and populist movements around the world is in part a reaction to the negative effects of shareholder primacy. Executives appear to be listening. Days after the Business Roundtable ditched shareholder primacy in the U.S., Business for Inclusive Growth, a coalition of 34 multinational companies, announced an initiative to tackle inequality with help from the Organization for Economic Cooperation and Development. There will be no shortage of observers calling the gathering at Davos an empty gesture this week, but the billionaires are right about one thing: Ignoring inequality and climate change is no longer an option. Now let’s see who’s willing to pay for it.To contact the author of this story: Nir Kaissar at nkaissar1@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nir Kaissar is a Bloomberg Opinion columnist covering the markets. He is the founder of Unison Advisors, an asset management firm. He has worked as a lawyer at Sullivan & Cromwell and a consultant at Ernst & Young. For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Zacks
Wind to Lead 2020 Electric Generation Capacity: Stocks in Focus
A total of 18.5 gigawatts of wind capacity is scheduled to come online by the end of 2020. Expiration of PTC at the end of 2020 seems to be the primary driver of this wind capacity addition.
- Moody's
Aernnova Aerospace Corporation S.A. -- Moody's assigns B1 ratings to Aernnova; outlook stable
Moody's Investors Service, ("Moody's") has today assigned a B1 corporate family rating (CFR) and B1-PD probability of default rating (PDR) to Aernnova Aerospace Corporation S.A. (Aernnova). Debt instruments will be issued by Aernnova Aerospace, S.A.U. and guaranteed by Aernnova.
- Reuters
Embraer studies turboprop to be developed through Boeing venture
Brazilian planemaker Embraer is in the advanced stages of studying the launch of a new turboprop aircraft to be developed through a venture it is planning with Boeing, subject to corporate approvals, a top executive said on Monday. The aircraft would be in the same size range or even larger than the 70-seat ATR-72, a Franco-Italian aircraft that currently dominates the market, Embraer Commercial Aviation Chief Executive John Slattery told Reuters. Embraer agreed in 2018 to fold its commercial aircraft activities into a venture to be controlled by Boeing.
- MarketWatch
These stocks soared even as the companies lost money — here’s why that’s not as crazy as it sounds
DEEP DIVE The monetary forces that have helped feed the bull market are so strong that scores of stocks have risen significantly over the past year even as the companies themselves have been losing money.
- InvestorPlace
Should Insider Buying Tempt You Into These 7 Stocks?
When insiders sell a stock, investors do not always get a clear signal on what that means. Automatic selling could send false bearish signals that are not there. Conversely, insiders buying shares suggests that the executive group is bullish on the company's near-term prospects. Chances are low that insiders would buy shares if they did not believe that markets undervalued the company.Investors may search out large-capitalization companies that had insiders buying shares in recent months. There are four technology companies, two consumer discretionary firms and one health company that have reported notable insider buying activities. Even more compelling with these seven companies is that they may suit investors looking for a good deal. Their share prices either fell hard recently or their stocks are already trading at favorably low valuations.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Intel (INTC)Source: JHVEPhoto / Shutterstock.com Despite trading close to 52-week highs, insider buying of Intel stock suggests James Goetz is confident in the chip giant's future. Technology fans are certain that Advanced Micro Devices (NASDAQ:AMD) will take its notebook, PC and server market share through Ryzen 4000, Ryzen and EPYC chips, respectively. But value investors unwilling to overpay for AMD stock may hold Intel (NASDAQ:INTC) instead.The dividend yield of 2.1%, price-to-earnings ratio below 14 times and its ambitions beyond PC chips are just a few reasons to hold the stock.At the Mobileye Media & Customer Conference, Intel highlighted the growth of Mobileye chip shipments, which topped 17.4 million in 2019. This is up from 12.4 million in 2018. With 33 design wins and 16 product launches in 2019, Intel's Mobileye offers tremendous growth ahead. For example, its chips supply front camera functions for driver assistance in automobiles. Its conditional autonomy features include driver monitoring and surround vision.In 2022, the unit expects to have "mobility as a service" ready. One day, Mobileye will have full autonomy solutions for the auto market.Tesla (NASDAQ:TSLA) popularized the idea of self-driving electric vehicles, but Intel has tremendous revenue growth opportunities as it sells more autonomous driving chip solutions on the market. * 7 Small-Cap Stocks That Are Not Worth a Second Glance Per simplywall.st, the stock is historically inexpensive and also offers a healthy dividend yield. Its price-earnings to growth ratio is one risk to watch out for. At 6.4 times, the value relative to future growth is poor. In that same vein, analysts are neutral on the upside for INTC stock, with an average price target of $58. Alternatively, a 5-year discounted cash flow model that assumes revenue growing 5% annually implies a fair value of near $61. Uber (UBER)Source: BigTunaOnline / Shutterstock.com Director Ronald Sugar's buying of 35,000 Uber (NYSE:UBER) shares at $27.20 late last year proved timely. The stock rallied since then, and might break out after its earnings report on Feb. 6. Despite the stock showing strong performance, Uber has some major near-term challenges to overcome.The company dropped upfront pricing for most Californian riders. By showing customers only estimated prices, removing rewards for frequent users and allowing drivers to turn down requests, Uber wants to get around what's being dubbed as the "gig-worker law." California's Assembly Bill 5 seeks to classify workers as employees. This gives them more labor rights but increases Uber's costs.To shift from ride-hailing toward technology, Uber added Korean automotive giant Hyundai (OTCMKTS:HYMTF) as its newest partner on electric air taxi development. Hyundai thinks it will have an urban air mobility service in 2028. But Uber investors are not looking at an air taxi as a source of revenue growth. Still, it does show that Uber is getting ahead of the technology curve and is seeking growth from innovation.Uber will continue investing in its marketplace to drive top-line and margin growth. It will invest more in its premium products, offering more options for customers. And it will have the financial discipline to minimize operating cost growth.Looking ahead to its earnings call on Feb. 6, Uber will give investors its full-year 2020 guidance. Expect strong ride usage driving revenue and plans for operating expenses falling throughout this year. Investors may prefer to play it safe by forecasting revenue falling to 25% annually. In this 5-year DCF model, Uber stock may have a downside risk of 26%. Salesforce (CRM)Source: Bjorn Bakstad / Shutterstock.com Director Susan Wojcicki's purchase of 1,100 shares of Salesforce (NYSE:CRM) stock at about $175 on Jan. 7 proved timely. The stock reached new highs last week and shows no sign of falling off.A few analyst upgrades create a strong uptrend in CRM stock at the beginning of this year. RBC and Jefferies posted positive reports on the company. Last month, Cowen called the stock the best idea of 2020.On Dec. 3, Salesforce reported revenue growing a solid 33% to $4.5 billion. Earnings per share of 75 cents were ahead of consensus estimates. The cloud software firm has strong momentum and the business is getting stronger. The revenue growth should impress even the most bearish investor. The company is delivering on good experiences and is exceeding expectations. This is attracting more companies from all over the world.Salesforce has a simple approach: It centers its solution on the customer. So, they see the company as its trusted advisor. * 9 Up-and-Coming Small-Cap Stocks to Watch The company cited many big companies as customers, including Boeing (NYSE:BA), Siemens, CarMax (NYSE:KMX) and Corteva (NYSE:CTVA). So, by creating a 360-degree view of its customers, Salesforce is helping offer a better customer experience. Since no other software company offers this level of customer management, Salesforce has a strong moat. Fastly (FSLY)Source: Blackboard / Shutterstock Last summer, an insider buying shares of Fastly (NYSE:FSLY) may have proven to be too early. The stock is stuck in a trading range, but its fundamentals are getting better.Fastly posted third-quarter revenue growing $49.8 million, up 35% year-over-year. It lost 9 cents a share on a GAAP basis. In Q4, it still expects a loss between 10 cents and 13 cents. And for the full-year 2019, it expects revenue as high as $198 million.Fastly is cutting costs and seeking operating leverage opportunities to reach a path of profitability. Its network attracts developers who continue to use more of its platform and tools. So long as more developers join the service and use its newer tools, Fastly's revenue growth could accelerate. Last quarter, it added a developer library. So, by including ready-to-deploy code and solution patterns, users may work more effectively and save on development time.New product launches, such as Compute@Edge, a partnership with HashiCorp and tools for big data analysis, may bring on more developers in the months to come. Raised full-year revenue expectations suggest that the company is already noticing strong demand for its new products.Fastly does not get much investor coverage and has only one analyst setting a $24 price target. Investors may assume revenue growing as low as 8% in a 10-year DCF revenue exit model. In this forecast, the stock is worth around $21. General Electric (GE)Source: testing / Shutterstock.com General Electric (NYSE:GE) CEO Larry Culp bought over 300,000 more GE shares in August 2019, at a price just over $9 a share. The stock traded recently at 52-week highs, meaning that buy appreciated well for Culp.Known for its ties to inventor Thomas Edison, GE was formed from two companies merging in 1892. Aviation, healthcare and power made up its core businesses back in 2018. Today, it is shifting its focus out of healthcare and into power regeneration.That move will pay off. Looking ahead, General Electric set a priority to turn around its hydro and grid business. On its conference call, Culp said:"At Renewable Energy, we're well positioned to capitalize on the energy transition. Orders and revenues were up double digits again, as we delivered approximately 1,400 turbines and repower kits in the quarter. We're seeing strength in international orders and order pricing continues to improve."General Electric posted renewable energy orders growing 30% to $5 billion. Its overall backlog of $27 billion is up 19% year-over-year.GE knows it cannot ignore the renewables energy business because of the addressable market size. The International Energy Agency said that offshore wind energy is a $1 trillion market by 2040. General Electric itself must deliver on better profitability as its business grows. * 4 Energy Stocks to Power the New Year The company is not yet there. Margins fell roughly 2% in renewables in the last quarter. As its cost reduction programs progress and onshore volumes grow, GE's profitability will improve. Cigna (CI)Source: Piotr Swat / Shutterstock.com While it wasn't as immediate, a December insider buy of Cigna (NYSE:CI) stock by Eric Foss paid off. Foss bought 10,200 shares of Cigna at about $195 a share on Dec. 3. Those shares topped over $210 in early January.So, is it too late for you to join in?When it next reports results on Feb. 6, the company will likely announce another strong quarter. In the third quarter, it posted earnings growing 14% to $1.4 billion, or $3.57 a share. Revenue more than doubled to $38.6 billion. The company issued a non-GAAP EPS forecast of $16.80-$17.00 for FY 2019. For 2020, it expects retention of a healthy 97%.Cigna announced the sale of its Group Life and Disability Insurance unit in December. This allows it to raise its share buyback program by a lofty $4 billion. And since the unit sale will bring in $6.3 billion, Cigna may use some of those funds to reduce its debt.In addition to disciplined balance sheet management, Cigna is integrating its Express Scripts unit well. It already expects top-line growth of 8%-10%. Thanks to international growth, enterprise growth will be 6% to 8%. Strong pharmacy solutions outside of the U.S. are driving positive results. And as Cigna adds artificial intelligence predictive indicators and predictive modeling against its benefits business, the company will squeeze out more profits. Conagra Brands (CAG)Source: Jonathan Weiss / Shutterstock.com Conagra Brands (NYSE:CAG) stock spiked to the $35 level after the processed and packaged goods supplier reported strong quarterly results. Even though an insider bought the stock at higher prices, valuations are compelling at 19.9 times earnings. On Jan. 2, Craig Omtvedt bought 40,000 shares at a price of $33.99 for a cost of about $1.4 million.The company posted its key initiatives that were all on track. Frozen and snacks, plus Hunt's Tomato and Chef Boyardee all showed strength. And even though the debt-to-equity of 1.4 times is unfavorable, the company continues to pay down debt. As year-to-date margins rose 21 basis points to 16.5%, integration and synergies will drive costs lower.In the Q3 period, Conagra found $42 million in savings, and now forecasts $305 million in upside synergies. This is up from a prior $285 million estimate.Conagra forecasts that in fiscal 2020 its product launch cycle will lead to improving results in the second half of the year. Although CAG stock initially soared on this news, the markets adjusted after processing the forecast timeline.Analysts have a modest upside price target on Conagra stock. Based on 11 analyst reports, the average price target is $34.73, which implies about 5% of upside from its current share price. Conversely, a cautious investor may model a 5-year DCF revenue exit model. Assuming revenue stalls in that time frame, the stock is trading at a fair value of around $33.As of this writing, Chris Lau did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * The Top 5 Dow Jones Stocks to Buy for 2020 * 7 Fintech ETFs to Buy Now for Fabulous Financial Exposure * 3 Tech Stocks to Play Ahead of Earnings The post Should Insider Buying Tempt You Into These 7 Stocks? appeared first on InvestorPlace.
- InvestorPlace
3 Factors to Consider Before Gambling on GE Stock
Once an iconic industrial giant, few companies have suffered as ignominious a loss as General Electric (NYSE:GE). In fact, the GE stock price peaked in the 2000s era dot-com bubble, never threatening to regain its former glory. But with shares turning in a tremendous performance in 2019, can this beleaguered organization do the impossible and recover?Source: JPstock / Shutterstock.com Obviously, I can appreciate the healthy skepticism that abounds with this name. Not only did GE stock peak roughly 20 years ago, it plummeted following a sizable rally leading up to the 2008 financial crisis. Shares again crashed in 2017 after the company's fiscal situation became untenable.Plus, there's the adage: if shares are cheap, there's usually a reason for it. With GE stock, you're taking a big risk that management can pull off a perhaps unprecedented recovery.InvestorPlace - Stock Market News, Stock Advice & Trading TipsTo be fair, the business leader that has the potential to do this is current CEO Larry Culp. An executive with a long history of accomplishments, he grew the market capitalization of his previous employer Danaher (NYSE:DHR) to $50 billion from $9.7 billion during his 14-year tenure. * 9 Up-and-Coming Small-Cap Stocks to Watch That said, Culp transformed a solid company to a great one in Danaher. But with General Electric, the wall that he must climb is in a different dimension. To draw a comparison, GE stock is the Chesapeake Energy (NYSE:CHK) of the industrial sector in that excellent leadership is not enough: GE requires other factors to shift favorably to see the recovery through.Can it happen? It's not an opportunity for risk-averse investors. However, if you want to take a small, measured gamble, here are three elements to consider: GE Stock May Enjoy a Geopolitical TailwindGeneral Electric's long-term stakeholders are undoubtedly familiar with the saying, "when it rains, it pours." That was evident when Boeing (NYSE:BA) suffered a serious crisis with its 737 Max 8 jetliner. Due to a faulty stabilization mechanism, government agencies throughout the world grounded the plane until Boeing got their act together.As luck would have it, General Electric is the manufacturer of the Max 8's engine. Moreover, the company's aviation division was one of the few bright spots. Without it, the nearly impossible becomes simply the impossible. Naturally, then, investors avoided GE stock like the plague.However, the 737 Max 8 crisis won't last forever. Once Boeing earns back its customers' trust, General Electric can then get back to business.Also, GE's fortune may have finally turned regarding outside tailwinds. Presently, the headlines are not focused on Boeing, but rather, tensions between the U.S. and Iran. With the possibility that the conflict could eventually turn hot, GE's military aviation unit may enjoy a sizable lift. Power Is Still RelevantOne of the conspicuous societal shifts that we've witnessed over the years is environmentalism. Concerns about sustainability have dominated the headlines last year. And one of the forwarded solutions is to promote clean energy initiatives.Last month, the Los Angeles Department of Water and Power announced their intention to convert one of their power plants to 100% hydrogen by 2045. To do this, the utility firm will integrate a variety of renewable energy platforms to produce hydrogen via electrolysis. Currently, technological barriers prevent meeting the 100% hydrogen goal earlier.But according to Harvard researchers Lee M. Miller and David Keith, that might not come to fruition. Based on their analysis, the U.S. is grossly underestimating the land requirements for going fully green. As an example, if the entire country were to be powered via renewable energy sources, "it could require one-third of the country be covered by renewable solar and wind energy facilities."In other words, General Electric's power unit is still relevant. It's just taking some time for influential people and organizations to realize this. Technicals Are CompellingWe all know that GE stock is cheap. And as I mentioned above, such discounts exist for typically unpleasant reasons.However, the opposite angle is that shares have jumped substantially from its late 2018 lows. While hiccups have presented themselves along the way, the equity has marched steadily higher. Thus, there's a reason for that too.At time of writing, GE stock is trading just under $12. That places shares at the support line just prior to its October 2018 crash. To put it another way, GE is at a crossroads.For conservative investors, it's safer to assume that shares have again hit a peak. Culp can work wonders but General Electric requires a miracle. But for speculators, there might be enough momentum (at least in the nearer term) to spark a significant lift.As of this writing, Josh Enomoto did not hold a position in any of the aforementioned securities. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 9 Up-and-Coming Small-Cap Stocks to Watch * 7 Energy Stocks to Buy on the Resurgence of the Oil Boom * 3 Standout Oil Services Stocks to Buy The post 3 Factors to Consider Before Gambling on GE Stock appeared first on InvestorPlace.
- Bloomberg
Manchester United Is the General Electric of Football
(Bloomberg Opinion) -- Manchester United Plc is the General Electric Co. of soccer.Both are storied giants used to dominating their respective fields, who enjoyed their heyday in the 1990s. In Alex Ferguson and Jack Welch respectively, they had dominant leaders who set an all-but-impossible standard to follow (even if there are questions about what they left to their unfortunate successors). And in recent years, both have a track record of poor capital allocation that has seen them underperform their rivals.Where Man Utd has spent hundreds of millions of pounds over the past eight years buying players such as French midfielder Paul Pogba and Belgian attacker Romelu Lukaku, GE went on a spending spree that included the 12.4 billion-euro ($13.8 billion) acquisition of Alstom SA’s power generation business. That deal’s entire value was ultimately written down.When Jeff Immelt took over as GE’s chief executive officer in 2001, it was the biggest company in the S&P 500. Over his 16-year tenure, he spent some $200 billion buying companies, yet shareholders enjoyed annual returns of just 0.5%. In the same period, the S&P 500 was averaging returns of 7.4% a year.Man Utd is much the same. After winning 12 English Premier League titles in 20 years, the club has won just one championship since its 2012 initial public offering. That’s even as it spent a net 740 million pounds ($965 million) through June 2019 buying new players. In the same period, its bitter rival Liverpool FC spent spent less than half that amount, yet was crowned European champion last year and is running away with the Premier League this season.Soccer fans will argue all day that their club owners under-invest in the playing squad to milk the club for cash. Man Utd is owned by the American Glazer family and chants of “Glazers Out” are regularly heard at the team’s Old Trafford stadium. Fans accuse them of leveraging up the club and keeping the IPO proceeds for themselves.The story for investors is just as grim. Since the IPO, Man Utd has returned 5.8% a year. Italy’s Juventus Football Club SpA, Germany’s Borussia Dortmund GmbH and AFC Ajax NV in the Netherlands, all publicly traded, have averaged returns of 22% in the same period.Adding to the ignominy, the consulting firm Deloitte expects revenue at Man Utd, which has long challenged Spain’s Real Madrid and Barcelona for the title of the world’s most valuable soccer team, to fall as much as 11% this year, as failure to qualify for the European Champions League hurts sales. That could allow domestic rivals Manchester City FC and Liverpool to overtake it, knocking the Red Devils off the top spot in England for the first time since Deloitte began its Money League report on soccer 23 years ago.The problem isn’t that Man Utd has skimped on player investment — the numbers show that it hasn’t, at least in recent years. But it has invested poorly. A useful point of comparison is Juventus, which occupies a similar status in Italy, having won more Italian championships, known as Scudettos, than any other team.After the Turin-based club, run by the same Agnelli family that controls Fiat Chrysler Automotive NV, sold Pogba to Man Utd for 89 million pounds, it reinvested the proceeds in a string of players who subsequently led the team to the final of the Champions League, Europe’s top club competition. In the 12 months after Pogba’s departure, Juventus’s share price climbed 141%, although admittedly this was from a very low starting point.Since the Italian team signed Cristiano Ronaldo, a five-time winner of the FIFA Ballon d’Or award for the world’s best player, for 100 million euros in 2018, stock increases have added almost 800 million euros to its market capitalization. That’s a very good return on investment, regardless of how Ronaldo plays.The comforting news for Man Utd is that it differs from GE in one key respect: its problems are easier to solve. In aviation, power generation, and oil and gas equipment, GE makes products for markets that face an extremely uncertain future. The Manchester giant just needs to invest its capital more shrewdly. The best way to do that is to improve its long-term recruitment strategy, and for that it will need more effective management structures in place. Ed Woodward, the club’s executive vice-chairman, is the man in the firing line for increasingly angry fans. Immelt would no doubt commiserate.\--With assistance from Elaine He.To contact the author of this story: Alex Webb at awebb25@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Alex Webb is a Bloomberg Opinion columnist covering Europe's technology, media and communications industries. He previously covered Apple and other technology companies for Bloomberg News in San Francisco.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
- Barrons.com
Investors Have Largely Forgiven Boeing. What About Consumers?
We really have no choice, Barron’s Al Root says in the latest episode of our weekly podcast, The Readback.
- Investor's Business Daily
Nine High Dividend Stocks You Can Count On
High-dividend stocks can be misleading. Here's a smart way to find stable stocks with high dividends. Watch these nine dividend payers on IBD's radar.
- Barrons.com
A GE Critic Says the Stock Price Is Wrong. But President Trump Has Hope.
J.P. Morgan analyst and General Electric bear Stephen Tusa continues to question the stock price calling it “wrong” in a Thursday research report.
- Bloomberg
How Boeing Lost Its Way
(Bloomberg Opinion) -- The 2019 column I most wish I could take back was about Boeing. In May, two months after the second deadly 737 Max crash, I compared Boeing’s current troubles to other times when Boeing had stumbled badly, including 2013, when the new 787 — which had come to market four years behind schedule —had a problem with its lithium ion batteries, which burst into flames several times. The Federal Aviation Administration even grounded the plane temporarily.Airplanes are fiendishly complex, and new planes almost always have kinks that need to be worked out (though, admittedly, those kinks don’t usually include fatalities). In any case, my working assumption was that the company had always overcome its problems and would do so again. “Boeing’s history strongly suggests that it will recover from this fiasco and do so quickly,” I wrote. “It will emerge stronger than ever.” Ouch.Within a matter of months, I could see that I was wrong and that Boeing was not the same company I had followed two decades earlier. In October, Chief Executive Officer Dennis Muilenberg testified before Congress. He was awful. He kept saying that safety was part of Boeing’s DNA, yet the evidence angry legislators confronted him with — internal emails, for the most part — suggested just the opposite: that safety was no longer high on Boeing’s list of priorities. What was ascendant was maximizing shareholder value, with catastrophic consequences.The company cut corners to get the plane on the market quickly. It used the least expensive suppliers regardless of how inexperienced they were. Its manual contained only one sentence about the system that was the root cause of the crashes. Worst of all, it persuaded the F.A.A. — and its airline customers — that pilots didn’t need flight simulator training to fly the 737 Max. The release of a devastating batch of internal Boeing emails late last week — showing engineers rushing to get a plane to market despite knowing it had serious problems — only reinforced the notion that Boeing’s culture had been compromised. A company that had long been run by engineers for engineers was now a company run by corporate bureaucrats whose primary goal was to please Wall Street. That’s the underlying story those emails tell.Which begs the question: How did this happen?In the Atlantic not long ago, business writer Jerry Useem suggests an answer. He marks May 2001 as the beginning of Boeing’s cultural decline; that month, top executives announced that they were moving the company’s headquarters to Chicago. More than 30,000 engineers would remain in Seattle, mind you. But the top 500 executives would move 2,000 miles away.“When the headquarters is located in proximity to a principal business — as ours was in Seattle — the corporate center is inevitably drawn into day-to-day business operations,” CEO Phil Condit said at the time. How he could view removing the top brass from the “day-to-day business operations” as a net positive is beyond comprehension. But he did. Useem wrote: “The present 737 Max disaster can be traced back … to the moment Boeing’s leadership decided to divorce itself from the firm’s own culture.”Condit was ousted in 2003 (in part because he had a series of affairs with female employees) and was succeeded by Harry Stonecipher. Stonecipher, who had been CEO of McDonnell Douglas when it merged with Boeing in 1997, had spent the bulk of his career at General Electric, including seven years under Jack Welch. As I’ve noted before, Welch’s stated goal was to make GE “the world’s most valuable company,” which meant focusing first and foremost on finding ways to increase the company’s share price. As his underlings took over other companies, they brought that mindset with them.Stonecipher was no exception. At Boeing, he gained a reputation as a ruthless cost-cutter and expressed pride in the way he was blowing up the company’s engineering mindset. (“When people say I changed the culture of Boeing, that was the intent, so that it’s run like a business rather than a great engineering firm,” he once said.) Wall Street loved it; the stock price rose fourfold.When Stonecipher was fired in 2005 (also for having an affair with a subordinate), the board passed over the obvious internal candidate, Alan Mulally, the head of the commercial airplane division and Boeing’s last great engineering executive, and brought in another Jack Welch protege, James McNerney. So now Boeing had a CEO who knew nothing about how to manufacture an airplane. And this lack of engineering know-how was compounded when McNerney named Scott Carson to succeed Mulally, who left in 2006 to become CEO of Ford Motor Co. True, Carson was a Boeing lifer, but he was a salesman, not an engineer.In 2007, McNerney inaugurated a series of stock buyback plans, which lifted the stock price; it repurchased $6 billion worth of shares in 2014 alone. The CEO and other top executives received tens of millions of dollars’ worth of stock options and stock grants. Dividends were doubled. The stock bottomed out at $30 a share in the aftermath of the financial crisis, but by the time McNerney stepped down, it was approaching $150 a share.Meanwhile, Boeing was putting the screws to its unions, eliminating their pensions and moving some production to a nonunion facility in South Carolina. Richard Aboulafia, the well-known aviation consultant, thinks this was a critical mistake — and another example of how little McNerney understood about the business of building airplanes.“Aviation is not like other industries,” he wrote in Forbes after McNerney announced his retirement. “There are certainly cost pressures, but this is a capital-intensive business with very high barriers to entry. Labor costs just don’t matter as much compared to other industries.”Aboulafia concluded: “An experienced and motivated workforce, therefore, is the most important asset a company has. McNerney failed to recognize this important fact, and the company has suffered as a result.”In that same essay, Aboulafia noted that the incoming CEO, Muilenberg, was an aviation engineer, and though he had spent his career on the defense side of the company, there was hope that he could reverse some of McNerney’s emphasis on the stock price. But it wasn’t to be. Instead, he ratcheted up the company’s stock buybacks, retiring 200 million shares — a quarter of the company’s stock — at cost of $43 billion.How could Boeing afford to do that? As Jonathan Ford pointed out last August in the Financial Times, it was precisely because it was saving so much money on the 737 Max. Instead of starting from scratch and building a new plane, it simply “bolted new fuel-efficient engines onto a tweaked existing airframe.” Ford concluded: “Boeing was able to redirect some of those ‘savings’ to repurchase stock instead.”By the time Boeing decided to cobble together the 737 Max, its engineering culture was completely broken. Here’s how Aboulafia described it to Useem in the Atlantic:It was the ability to comfortably interact with an engineer who in turn feels comfortable telling you their reservations, versus calling a manager [more than] 1,500 miles away who you know has a reputation for wanting to take your pension away. It’s a very different dynamic. As a recipe for disempowering engineers in particular, you couldn’t come up with a better format.You can see that disempowerment — and its consequences — in the recently released emails. Instead of bringing their fears and complaints to superiors, the engineers grouse to themselves about the problems they see with the plane. They are bitter about management’s unwillingness to slow things down, to build the plane properly, to take the care that’s required to prevent tragedy from striking.There is one email in particular(1) from an unidentified Boeing engineer that I can’t get out of my head. It was written in June 2018, about a year after the company had begun shipping the 737 Max to customers:Everyone has it in their head that meeting schedule is most important because that’s what Leadership pressures and messages. All the messages are about meeting schedule, not delivering quality… .We put ourselves in this position by picking the lowest cost supplier and signing up to impossible schedules. Why did the lowest ranking and most unproven supplier receive the contract? Solely based on bottom dollar…. Supplier management drives all these decisions — yet we can’t even keep one person doing the same job in SM for more than 6 months to a year. They don’t know this business and those that do don’t have the appropriate level of input… .I don’t know how to fix these things … it’s systemic. It’s culture. It’s the fact that we have a senior leadership team that understand very little about the business and yet are driving us to certain objectives. It’s lots of individual groups that aren’t working closely and being accountable …. Sometimes you have to let things fail big so that everyone can identify a problem … maybe that’s what needs to happen instead of continuing to just scrape by.Of course that’s exactly what happened: the 737 Max failed big — at a cost of 346 lives. Shareholder value has caused much harm in the three decades since it became the core value of American capitalism: diabetics who can’t afford insulin; students ripped off by for-profit universities; patients gouged by hospital chains; and so much else. But none worse than this.(Corrects the given name of aviation consultant Richard Aboulafia in the 13th paragraph.)(1) The email in question can be found on page 24 of this document.To contact the author of this story: Joe Nocera at jnocera3@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
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