A Look Inside General Electric's Freefall

Posted by: Lauren Young on March 4, 2009

As General Electric fell below $6 for the first time since 1991 on Wednesday (the share price fell as much as 18%, to $5.73, before closing at $6.69, down $0.32 or 4.6%), my colleague Jena McGregor and I checked in with three money managers to get their assessment of GE’s situation as well as an outlook for the stock.

Bob Bacarella, manager of the $30 million Monetta Fund, thinks the primary reason for GE’s freefall is concerns about credit quality. (GE is one of six companies in the S&P 500 with a triple-A credit rating from Standard & Poor’s, which, like BusinessWeek, is owned by McGraw-Hill.) In recent weeks, Standard & Poor’s as well as Moody’s Investors Service has signaled that a ratings downgrade may be in GE’s cards.

Bacarella figures investors are positioning themselves before a downgrade happens, so the pressure on the fixed-income side is spilling over to equity markets. He sees “a great buying opportunity,” and says he is adding to his GE stake, which he started building late last year.

While concerns that GE Capital’s finances are real, GE is “not a pure bank play where you’ve just got worry about leverage and sustainability,” Bacarella says. Sure, GE Capital has problems and may need to take some write-offs, but he continues to like the industrial side of the conglomerate’s empire. ”GE is one of those companies I believe in the next 3 to 5 years we’ll do well with,” he says.

Another reason the stock is under pressure is that dividend-oriented mutual funds might be selling their holdings on the heels of GE’s dividend cut. Yet Bacarella finds it reassuring that management is buying GE’s stock, too.

Jena spoke to Scott Lawson, an analyst and portfolio manager at Westwood Holdings, who has downsized his GE position in recent months to a size he calls “modest.” “There’s a psychology bias there,” he says, that stocks tend to get more volatile in the $5 to $10 range due to things like associated options.

Lawson notes that GE has traded in line with financial services stocks for some time now, where the investing philosophy appears to be “if in doubt, people sell.” He thinks most of the freefall this morning was from traders “smelling blood in the water” on concerns about GE Capital and that although the cost of cost of GE’s credit default swaps, which insure GE’s debt, hit a record, high CDS spreads for the company are nothing new.

Another contributing factor could have been a report from a UBS analyst issued Tuesday that said GE may have to raise more capital. However, GE issued a statement to investors this morning saying a need to raise new capital “is pure speculation.”

Robert Hagstrom, manager of the Legg Mason Growth Trust and an author of several books about Warren Buffett, puts it more succinctly: “The market does not like uncertainty/complexity/controversy,” Hagstrom says. There are times when these attributes signal massive mispricing and GE may be mispriced, he concedes. But right now “PhD investing” is not working. Says Hagstrom: “There are so many simple high-quality blue-chip names that can go up 50% or more, there is no need to make your life more difficult.”

Do you think GE can overcome these challenges?

Reader Comments

Timothy Sykes

March 4, 2009 1:10 PM

why not post some info from credible sources...these guys are about as credible as me! The credible guys see GE's debt and they realize there's a very real chance this thing blows up...as some bigger options players are betting. The good news is that would put a dent into irresponsible reporting as seen in Bweek & CNBC...soo let us rejoice!

Ryan

March 4, 2009 1:54 PM

Yes! Definitely! GE will be one of the biggest winners this year going forward! I see a 60%+ return between now and the end of the year if you buy today. GE is fine this is just one of those rare buying opportunity that only comes around once every 10 or 20 years.

Ben Jurevicius

March 4, 2009 2:24 PM

Yes, I think GE can overcome these challenges.

Alex

March 4, 2009 2:58 PM

GE will recover from this artificial freefall, it is again based on fears and not substance. GE will come back, the $6.00 price range is an awesome bargain, buy up! I have been buying at higher prices and am fully confident that GE will do well, I also have cash in GE interest plus and am not fearful at all, they pay one of the best interest rates...

GLL

March 4, 2009 3:05 PM

GE should divest of NBC. NBC and MSNBC are political lightning rods and their nonstop promotion of hard left ideology (socialism, globalism, environmentalism) gives the appearance that GE approves the message. Companies like GE should strive to be political neutral and keep out of the ongoing cultural war in America. It cannot possibly be good for their business as far as PR and marketing as it applies to consumers overall view of them as a company.

jd

March 4, 2009 3:05 PM

GE will bounce back. The triple A ratings are all BS along with the whole rating system itself. GE Capital is not in as bad of shape as everyone currently thinks. The true test will be the long tail of the mortgage crisis hitting their commercial real estate book, since weren't really involved in residential mortgages.

NK

March 4, 2009 3:09 PM

GE will absolutely get passed this. They still have a dividend even after the cut - and it's substantial considering the stock price. This is a diversified company that has reduced its leverage via GE Capital and will certainly gain business due to the stimulus package through both their Healthcare business, Infrastructure and Water Treatment. GE owns CNBC - and in a Financial crisis you know their viewership is up considerably. I'm bullish on GE in the long term. Great company.

Michael

March 4, 2009 3:10 PM

Lets be real..GE is a terrfic corperation,which is loyal to its share holders,the divedend cut is TEMPORIALY for the COMPANYS OWN GOOD,for now.Although the finanacil arm is disrupted because of this global credit mess(that will take a year or two to straighten it course)GE is still a power force.Lets not forget it MRI machines(in most mosdern hospitals),Jet engines and lets not forget the light bulbs.

FBEye

March 4, 2009 3:22 PM

I was told by a retired banker that GE has bonds that aren't really worth that much. He LOST a lot of money on these bonds. I believe he said that they were Genntech bonds, or something like that. I'm going to 'Google' that and see if those are the bonds he was referring to, OK? I'll 'Google' this- GENNTECH BONDS, and see what happens.

Jeff Immelt tells too many lies

March 4, 2009 3:31 PM

GE needs new creditable and capable leadership. Jeff Immelt is too dishonest to run GE.

He has destroyed enough shareholder value over his tenure… ($44 to $5) and the Board keeps loving every move… they must not own any shares.

Anything Jeff Immelt says should now be considered a lie or at least heavily discounted.

He said he didn’t need extra capital – lie
He said he wouldn’t cut the dividend – lie
He said he only keeps high performing employees – lie
He said 10% earnings was “in the bag” – lie

FBEye

March 4, 2009 3:33 PM

I was wrong when I said 'Genntech bonds' in my earlier comment. The correction should be this- Genworth bonds. It was 'Genworth bonds' that the retired banker I spoke about said were only worth about 65 cents on the dollar last year, around October. He cashed-in ALL of his stock back in September of 2008. I'm glad he did that. He would have LOST another $100,000+ if he had waited until December, according to him. I'm glad for Jim.

nardo

March 4, 2009 3:35 PM

i just bought stock in ge last week they will be fine ride the wave.

Astute Investor

March 4, 2009 3:44 PM

The problems at GE are great and this company will continue to spiral downwards. Expect penny stock territory by the end of the year.

George Busler

March 4, 2009 3:48 PM

GE will be in business tomorrow, and
will be able to be a leader in the US
industrial companies. Analysis are not
looking at the overall and longtern
assets of the company. It is almost crimal that this stock is selling add
$6.00. I am buying more.

Mike Demur

March 4, 2009 4:04 PM

As an OEM provider for GE wind and steam power divisions, I can assure all that energy business of GE is doing well and going in the right direction.

Additionally, GE is positioned perfectly to ride the benevolence of the new administrations focus on alternate energy resources and the creation of greener technologies.

I am confident from the manufacturing side of the business, that the GE stock will be trading by the end of the second quarter, beginning of the third quarter in the more realistic area of 15 to possibly 19 dollars a share.

LB

March 4, 2009 4:20 PM

It's a dog. And it's Immelt's fault..

JB

March 4, 2009 4:56 PM

Immelt just recently bought up 50k shares. Need I say more. The manufacturing story has been bleak, and GE because it is a leader in that sector has fallen victim to speculation that it will not hold up. This company has and will always be a stalwart. The stock price has just suffered from bad publicity. This stock is a steal at this price, for if GE were to somehow fail, you as the investor has much worse things to worry about than GE going bankrupt. If this company fails, so too does the economy. GE excels in virtually all aspects, and if you for some reason can't see that, you should not be investing period.

Las Vegas Dave

March 4, 2009 5:30 PM

There is no better company to park some of your stockpiled funds into. GE is a leader in most major industrial products, they are the Gold Standard of industrial firms. I'm buying all I can afford. This is a once in a lifetime opportunity. Watch all the mutual funds snap up GE once the economy starts to move ahead.

Ray Lopez

March 4, 2009 6:01 PM

GE's debt-to-equity ratio, at 8:1, is too high. Anything above 1.0 is suspect today. The average SP500 company as of a few years ago had a debt-to-equity ratio of 1.39. Here are the stats: Debt Equity Ratio. S&P 500, 1.39. Software Industry .11.

RTB

March 4, 2009 6:08 PM

Who would think GE would be in such a freefall. I sold all my GE shares a about a one or year and a half ago? at $36.00 . Stocks are volatile but for GE to go that far down is a shocker. Coupled with the current financial meltdown, I'd be careful from hereon in investing in stocks and uninsured bonds - I may even stay away from them altogether. Sure Money Market and CD's yield very little but at least the principal amount is always there.

Hilo

March 4, 2009 6:12 PM

Seems to me that a lot of sour grapes are out there in the form of people who had GE in the twenties and teens and bailed after losing a few bucks and the nerve to hang on in the current stupid and obtuse state of Wall Street hysteria. Those who are not disingenuous know that they need to be buying GE right now. May even wait until next week and catch an even bigger bargain once all the weak-minded shorters bail the hell out for no good reason. The sour grapes crowd needs to suck it up and buy again if they want to make their money back ever.

Ray

March 4, 2009 6:34 PM

GE will make it back but how soon. From a recent high of $36 per share down to this - that's going to be a long haul in this bear market and financial meltdown.

Jersey Kid

March 4, 2009 6:38 PM

JB :Immelt bought 83,000 shares at 43 and made a ton of other purchases all the way down, just like the loser that he is. I've been hearing this "buy of a lifetime" manure all the way down from 40. If all you experts know where the stock is going then why didn't you short it at 42.15? Then, you'd be billionaires and wouldn't be on here fooling yourself and everybody else with the idea that you know where any stock is going. Pathetic.

John Eibs

March 4, 2009 7:33 PM

May be GE's slimey way of doing business is catching up to them. I avoid buying any GE product or services after experiecing many low life tactics
used by them. I also as others to do the same.

Peter

March 4, 2009 7:52 PM

I love GE, i'm down 25k now but hope that the stock goes back up

Data Miner

March 4, 2009 7:57 PM

Have any of the GE longs on this board looked through all of GE's assets to determine what GE "marginally owns" but "completely owes"?

From GE's annual report:
"Financing Receivables is our largest category of assets and represents one of our primary sources of revenues. The portfolio of financing receivables, before allowance for losses, was $389.9 billion at December 31, 2007."

I'd hate to see anyone who really loves GE end up being hurt by this bad boy. If you are long, be careful, and make sure you've completely combed through GE's financial receivables. Don't buy based on history. Just because GE appears to have immortal brand equity, don't forget that it still is controlled by people. People make mistakes - big ones sometimes.

Brian

March 4, 2009 8:16 PM

JB observed:

Immelt just recently bought up 50k shares. Need I say more.

Are you that gullible? 50K Shares at $8 = 400K. Immelt makes 20 MM per year. This is about 3 days worth of his income. This was a blatant attempt by Immelt to deceive investors like you that he is bullish on GE. If that was true Immelt would have bought a couple million Shares.

Ex-GE Peon

March 4, 2009 8:30 PM

any GE employees here? ask them what the senior managers BS about everyday - AAA credit rating, how solid it is and how important it is to the company. I wonder what they will start talking about now.

The capital side is in a mess, as pointed out by Fortune earlier, real estates are sold every quarter to meet their numbers, so much for good planning and forecasting.

THe infrastructure side isn't doing well - orders are cancelled and less deals are done now because their so called growth countries are all tanking, ask the japs if they are still buying turbines in this current climate.

A great company gone wasted due to management inadequacies.

relativemoney

March 4, 2009 8:56 PM

GE... might go bankrupt or rated junk sooner than expected. with a ratio of 10% equity over total assets.... what assets??? what is the real value of these assets? so... you see the picture... any marking down on assets.... will drive equity level close to 0% equity. Accounting rules are the same for everybody

robert

March 4, 2009 8:56 PM

GE is going down, dragged down by the finance arm - and a lot of the rest of it isn't that good. it will be dismantled, broken up and jeff im-melt - emphasis on melt - is a schmuck.

Colt 45

March 4, 2009 9:24 PM

JB says GE excels in virtually all aspects! I agree! GE has excelled to the downside. The stock price says it all! I used to own GE stock and I had GE Interest Plus for many great years paying fantastic interest rates, but I just moved a lot of money from it to a ME account at a bank that has the same rate and is FDIC insured. A company is only as good as its CEO. How can you believe what GE is saying after recent statements and then doing the opposite! They would be better off keeping quiet and blaming the downside on the economy Want a pop in GE, tell the Board to fire Jeff Immelt!

AA

March 4, 2009 9:42 PM

$6-$7 is a steal...GE outlook is going to be more positive with higher returns as the market retuns to normal.

mte333

March 4, 2009 9:49 PM

I put my entire fortune, all of $636. in GE today. I hope the optimistic people are right, for it "seems" like a buy for the decade. My other choice was gold stock. GE all the way.

TREEFARMER

March 4, 2009 9:52 PM

stocks like pg,mmm,ge,bac&c will be here bigger and better.a few years from now we will all wish we had bought

Betty

March 4, 2009 10:36 PM

China is a very important key market for GE,especially now.There are so many chinese who want and are able to buy a car.

CK

March 4, 2009 10:43 PM

GE is a very well run company with top rated management. Sure there's a lot of uncertainty on GE Capital with very certain risk of further losses, derivs position which may sink the parent, additional posting of capital should the ratings are downgraded, but at the worst case, GE will break it up to protect the industrial business. I am sure management is hard at work looking at all possibilities. Remember, Warren Buffet, one of the world most astute investor entrusted $3B to GE, I don't believe he meant to throw it down the drain. He most likely forsee this when he wrote the check but believe the upside is very much greater than the risk.

This is a good buying opportunity for long term investors. They have leading positions in most of the industrial business and Jeff has repositioned the portfolio for future growth with heavy emphasis on infrastructure, renewable energy and healthcare in the last 5 years. These are the key drivers for growth not only in developed market but emerging market where the demand for infrastructure is tremendous for turbines, jet engines, water infrastructure, CT scanners, healthcare solutions etc. Imagine some of these emerging economies having to replicate the same amount of infrastructure like the US. How many turbines, jet engines, CT scanner do you think they need?

Disclosure : Long GE, ex-employee.

Born2Be

March 4, 2009 11:03 PM

What's up with you scared, fear mongered Americans....GE is not an American Bank ...see you Citi!! ...Hello BAC!! ....GE will rock the market in a few years and all of you who didn't buy it when at was low will be watching all of us who did retired and living well...Agrium (AGU TSX) is also a good buy @ $49 Canadian or TD Bank @ $34......This is the most fun the market has been in years...it's no fun when it's too easy!

GE is me

March 4, 2009 11:46 PM

I used to be in awe of GE's leaders thinking they had it going on. Boy, was I wrong. They're average - if not for the hardworking employees there, the company really would be in trouble. It's the folks there that will bring GE back. Not Keith Sherin, not Jeff Immelt. Those two need to go. Period.

Stuart

March 4, 2009 11:49 PM

I find it interesting that Jack Welch has been so critical of Immelt in the past while so many of GE's current problems are the result of GE capital, which Welch built and used to his advantage at the end of every quarter to nudge earnings over analyst expectations. Immelt's commitment to aggressively pursue emerging green energy technologies will ultimately renew GE's luster and prove Immelt to be a far better leader than Jack the blow-hard. Although I'm a current subscriber to BW, I cringe every time I see the last page with Jack's picture and commentary on it. BTW, I'm not a GE employee and never have been.

BSV

March 4, 2009 11:50 PM

A $12 or $15 price is a good deal for GE. A $6 or $7 price is absurd. If you're investing for anything beyond 12 months, this is your play.

You never know. GE might drop to $2 dolar

March 5, 2009 12:04 AM

You never know. GE might drop to $2 dolar.

Jim

March 5, 2009 12:13 AM

All the self professed "market experts" who post on this board stating GE is a bad play for the future are simply jumping on the panic bandwagon. Prediction: GE will still be here 5, 10, 20 years and the negative talk by these "geniuses" will turn into, "I told you GE would go up". Give it a rest already!

Hatim Tichout

March 5, 2009 12:17 AM

We are talking about more than 323000 JOBS if GE fails, can Obama affords that? i dont think so ..the market will go down to 4000 if that happened, so Buy in this dips and go to Santa Lucia for 3 years without looking at your brokrage account and TV.
MY 2 Cents

willie

March 5, 2009 12:24 AM

a lot of action on the put side at the $2.50 strike. Credit default swaps are abysmal. wake me up in the mid $4 dollar range, still has 30% to the downside- you can have all you want above $6.00

anon

March 5, 2009 12:44 AM

Lack of transparency, a good news culture, marketing spin, and inward looking leadership. All great topics in case studies at most business schools. All unfortunately lead to the same disastrous results.

People are misled if they believe the drop in stock price is just about credit ratings and GE Capital.

There is more to this story than meets the eye. Possibly the world has finally figured out that the balance sheets dont 'add up'.

Tab Cocovillea

March 5, 2009 1:03 AM

GE is getting beat down by shorts and speculators. They'll be around in another 100 years. This current pricing, just like Immelt's soon to be short career, is just a blip.

SM

March 5, 2009 2:43 AM

GE has fallen by 3- 8 percent almost everyday for the past several weeks.This company has many large writedowns coming soon.All the products made by GE are not selling as people are not replacing the older ones.This market is not recovering anytime soon nor would GE.I have done well repeatedly buying puts with progressively lower strike price.I have many put contracts with a srike price of $5.00.The way this market is behaving I can guess GE,BAC and C down in pennies and may take a decade before they bounce back to be $5-10.This stock was most likely overvalued to begin with for the past many years, condsidering all of its overzealous participation in capital markets.

simon

March 5, 2009 3:11 AM

In this volatile market,many syndicates are looking for hugh swings (either up or down) to made a fast money. GE just happen to provide such trading opportunity and it will continue to be volatile until there is clear visibility in GE

Erast Milan

March 5, 2009 3:42 AM

Observing from outside the first impression is that private shareholders sell under an extraordinary wave of speculation. Saying that Ge will fall to 2.50 within June or affirming that Ge needs more capital to avoid default is a sort of psychological terrorism; if you invested your savings and you see the stock falling you beging to act emotionnally instead of rationnally. Any information that an analyst produces should be confirmed with evidences while what is actually happening is that any "wizard" (like the one of UBS AG who predicted the fall to 2.50...) feels the need to post an analysis that rests on simple conjectures and hypothesis. In my opinion any false analysis published without evidence that produces a share fall should be sued.

Alfred Z Hill

March 5, 2009 4:50 AM

They said city would weather the storm, AIG was too big to fail and Lehman Brothers would never fall. Now we're hearing the same cheerleading about GE while the stock has droped from $13 to a little over $6 in 60 days. Ge is my favorite company because it's holding are a broad reflection of not only the American Economy but the World. But the stock has lost %67 of it's value just like the previous companies that I listed. Please for god sake don't be fooled or you'll up loosing more than I lost before I sold @ $10.35 Now it's at $6 and change. GE under $5.00 is bargain that can't be ignored but so was Citigroup, AIG, Fannie Mae. HIG, DRYS and on and on.

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Walter G

March 5, 2009 8:05 AM

I believe that GE will rebound strongly. Yesterday it had a
highest volume in its history, 752 Millions shares traded, which is equivalent to 7% of its total outstanding shares changed hands. If you look at the market, there have been massive mad sellers, but the
underlying supports have been very strong as well. People are loading
up GE at bargains with helps of short shooters and rumors of bad news.

GE is very strong fundamentally, it earned $18 billions last year, in a
well known very tough environment. So towards end of last year, Warren
Buffett, who only likes buying stocks that he could hold forever, put $3 billions in it. Obama administration likes developing alternative energy, GE gets 10 $billions from it...

Even you are an absolute techno, who does not believe in fundamentals, probably you won't disagree that daily and weekly charts of GE might look a bit oversold, with 7% of its outstanding shares changed hands in a single day...

Walter G

March 5, 2009 8:08 AM

I believe that GE will rebound strongly. Yesterday it had a
highest volume in its history, 752 Millions shares traded, which is equivalent to 7% of its total outstanding shares changed hands. If you look at the market, there have been massive mad sellers, but the
underlying supports have been very strong as well. People are loading
up GE at bargains with helps of short shooters and rumors of bad news.

GE is very strong fundamentally, it earned $18 billions last year, in a
well known very tough environment. So towards end of last year, Warren
Buffett, who only likes buying stocks that he could hold forever, put $3 billions in it. Obama administration likes developing alternative energy, GE gets 10 $billions from it...

Even you are an absolute techno, who does not believe in fundamentals, probably you won't disagree that daily and weekly charts of GE might look a bit oversold, with 7% of its outstanding shares changed hands in a single day...

Jose

March 5, 2009 10:09 AM

GE's recovery depends on the economy's recovery. I see GE as a responsible company which had one of its [many] units not do so well. GE has lots of tentacles into energy and potable water related technologies, both of which people will come to realize are huge needs in the future to come.

Great Dictator

March 5, 2009 10:47 AM

Expect GE to go down to $3. This recesion is going to last long and GE Captial is going to be a big burden in coming years unless they spin it off.

Hal

March 5, 2009 11:31 AM

Yeah, if GE went belly up the panic would be catastrophic. I wouldn't rule it out nor would I rule out economic catastrophe for the USA. People at large and in Washington don't get it (the extent of the problem) yet. Egg will be all over many "wise" faces.

Gloom and Doom

March 5, 2009 11:32 AM

Everyone is an expert. The fact is that we are heading into deep. I am very interested in buying when the dow at 5000. We are not there yet.

Nyer

March 5, 2009 11:36 AM

ok, so you have this division called GE Capital and it has contributed GREATLY to earnings for years - WHY WHY WHY would you sell it off and shrink it???

The greatest capitalist company in the world wants LESS total profit? What's wrong here?? Or is it a shedding of liabilities and losses??

And as to the CFO's comments this morning - his lifelines for capital are:

1 - the remaining $4B in dividends they are paying (great news for shareholders!) - which is only available if they continue to make profits in the worst economy in history (assuming this will break the records set in the Great Depression)

2 - he will tap the profits/cash flow of the industrial business (I'd love to be an employee of the divisions giving up it profits to save a sinking shop)

3 - he can tap the gov't (not a good sign)

4 - he can raise fresh capital? from who? that's not gonna happen once you're downgraded and in financial straits - may have worked last year for $3B from Warren, but who's going to pony up cash to a falling giant??

His lifelines sound (barely) ok today, but in 4 weeks when he desperately needs them, none will be viable

elek

March 5, 2009 11:55 AM

My mother owned GE stock for almost 60 years--since she worked for the company during the Korean war. When she died last year, we took a look at the stock price, & found it had done nothing *but* fall over the last 8 years. Fallen, in fact, from a high of $60 in the late 90s to ~$33, at the time (last summer). We sold, & I'm not sorry. The company has plenty of problems it hasn't begun to address.

Sure the last year's been hard on everyone. But what's been going on at GE has been a problem for almost a *decade*. What I can't understand is why no one in the media seems capable of speaking substantively & frankly about the long-standing problems at GE. It's like the Emperor's New Clothes.

Ed

March 5, 2009 12:03 PM

I have no shares in GE but if I was to buy I'd buy both a put and a call and just hope I got a big move.
God is the only one you can trust in this market.
Good luck.

jane

March 5, 2009 1:45 PM

I worked at G.E. for twenty years. G.E. always relied on the interest they made off the huge pension fund to make investors happy. If you take out the interest on their pension fund over the years you have a very adverage company. While I believe that counting the pension money is not illegal it clouds their real bottom line. Remember the pension fund years ago was around 40 billion. Take off the interest each quarter and what do you have? The real number which isn't very great.

Benz

March 5, 2009 1:47 PM

Anybody know why they don't just split off GE Capital? Seems like the rest of the company alone could support current market cap.

Jonathan Clark

March 5, 2009 2:17 PM

wow !!..we are the idiots
jeff is making the millions (irrelevant to the share price)
gosh we humans are pathetic

RAJ - Just another Puzzled Stockholder

March 5, 2009 2:43 PM

Just as BENZ above has been asking, I have been wondering why the GE Board doesn't spin off the more troubled GE Capital entity to the GE stockholders. Getting the company to divide itself will reduce income into two entities, but perhaps allow the stronger parent entity of GE to adjust to a more reasonable market multiple, and stop the endless speculation about surviving in this downturn. It would be much easier to find new capital funding sources if GE Capital tanks than re-inventing the rest of what GE does seemingly well. Perhaps someone on or from the Board originally could enlighten us?
Jack Walsh are you following this? May we hear from someone?

Bill Rothschild

March 5, 2009 3:20 PM

I was privileged to attend a meeting at which GE's CEO, JEFF IMMELT talked about the challenges facing the world and GE today and I was impressed by his insights and sense of reality. Jeff described the challenges we all know about the economy and added a few personal insights, as well as the issues he has had to deal with.


I listened to his insights and decisions and came a way with a strong feeling that Jeff is a TRUE LEADER in the GE TRADITION and is trying to ADAPT to the dynamics and complexity facing us all, but most of a $ 187 Billion, global conglomerate.

As a GE investor, though I am shocked and discouraged with the low GE price and EPS, I am willing to accept that Jeff and his team are in control, know what is happening and convinced that the company is 'SECURE", a word he used several times.

I still have concerns about many of the elements of Jeff's strategies and vision, but not about his dedication, abilities and willingness to face reality and make the best decisions possible. I wish I could say the same about those making decisions in Washington about spending the biggest "money throwing" event in the history of the world.

If I made investment decisions, I would bet on the IMMELT team to keep the ship on course and viable...

Bill Rothschild..author of the comprehensive and objective assessment of GE's successes and failures THE SECRET TO GE's SUCCESS.... note: the word failures...GE has had failures in the past, admitted mistakes and continued to prosper.

Anand

March 5, 2009 5:13 PM

America is going to go belly up soon, we are already in a depression, people are just not talking about it. GE stocks will drop down to few pennies and until then it is not a good buy.

Walter Guan

March 5, 2009 5:14 PM

I totally agree with Bill Rothschild. I believe that it is Jeff's "dedication, abilities and willingness to face reality and make the best decisions possible" one of elements got Warren Buffett put $3 billions in GE.

Technical point of view on GE today shows sign of reversal pattern. Price is not longer falling and volume is dropping. Despite Dow Jones and NASDAQ are down more than 4%, GE stays mostly above positive territory, even at closing. 6.71 at 4:00:00pm EST. It was the 7.9M dumping at market at 4:00:27 push it down 5 points.

Today CFO of GE also dismissed the rumors which helped short shooters for last couple of days. I personally believe that GE would rocket up in next few days.

JB

March 5, 2009 5:41 PM

@ Brian: Then tell me why you don't see other CEO's heading "troubled" corps doing the same! Having trouble of thinking of any!? Well then you see why it's significant. Sure 400k is a relatively small amount of money with regards to his salary, but the action speak volumes when compared to a lack of executive enthusiasm in general. Immelt's salary isn't an aberration yet his enthusiasm is. Learn to look beneath the surface.

The Mad Hedge Fund Trader, San Francisco, CA

March 6, 2009 11:08 PM

One out of five stocks in the S&P 500 has a single digit price. General Electric (GE) hit the $5 handle. Amazing. This is a company that has $45 billion of cash, $60 billion in back up government financing, and has already rolled over 70% of its long term debt due this year. GE Capital will be profitable this year, because only 2% of its holdings are subject to market to market rules. CFO Keith Sherin says the only explanation for a share price that is a hat size is the rampant fear now sweeping the markets.

Nats

March 8, 2009 12:44 AM

Well the world business has gone into a tailspin .for Ge just to maintain it value it has to produce and sell and manufacture .For such a lumbering giant with no business globally I am sorry to say Ge is going down the rathole .
Most comments above are just wishful thinking and not realistic .
The above is without Ge having any problems .
GE has currently CASHflow problems ,payroll problems andmost important its strenght being in manufacturing ,it has biggest problems in manufacturing ..There are just no contracts . Thats why it went into banking .
AT around $7 currently ..DUMP THE STOCK ....

......................

JB

March 10, 2009 6:10 PM

Nats, give up investing to save your face as well as your retirement. You look real noble professing that advice prior to a rally. The stock was at 6 less than a week ago, it's now challenging 9- a 33% increase.

AVZ

July 17, 2009 9:05 AM

GE is lieing with their internal reporting and the inertion is slow to get an absolutely truthful picture. It's definitely we see next Q results for continius drop-down. The most profitable business for 2007-2008 was from private GE-Money loans. For GE-Energy are plans only, Water is better if to be sold out to companies could much efffecctive operate with such the cpecial business.
Whatever I don't beleive we see for negative results - GE is able for urgent and core improvement actions.

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About

Bloomberg Businessweek’s Ben Steverman focuses on the latest moves in financial markets and emerging trends in stocks, bonds, and funds, always with an eye toward giving readers a better understanding of the sometimes confusing and often chaotic world of money. Standard & Poor’s senior index analyst Howard Silverblatt will also provide his take on companies’ finances and the markets. Voted one of the “Top 100 Finance Blogs” in 2007.

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