General Electric(GE) is one of the largest multi national conglomerate in the world, a bellwether of the US and global economies. As we know, this company has its origin from Thomas Edison (an inventor with the most famous invention of all—a practical incandescent electric lamp) in the 1880s. The company is also ranked highly in the world in terms of market capitalisation and profits. In the investing world, this stock is a must have among fund management companies' stock portfolio. Below is a write up and comments on the company's shocking and disappointing 1Q results released last Friday and its future direction. Reuters:General Electric Co's shocking first-quarter earnings miss prompted some analysts and investors to question whether the company needed to break up or at least sell off some poorly performing businesses. But others said they remain patient, even though the share price has now dropped more than 19 per cent in the seven years since current chairman and chief executive Jeff Immelt took over at the conglomerate on September 10, 2001.
(Comment: He took over 1 day day before the terrorist attacks on the United States, which killed two employees and cost GE's insurance business $600 million - as well as having a direct effect on the company's Aircraft Engines sector. Does he brings bad luck to the company or not??).
The shares have also far underperformed the broader market in that period - the Standard & Poor's 500 index has gained more than 22 per cent since Immelt took over. GE's shares fell almost 13 per cent on Friday after the company's first-quarter earnings disappointed Wall Street. "(The miss) forces the focus back to the portfolio," said Nicholas Heymann, an analyst with Sterne Agee in New York. "The portfolio has to change."
Heymann singled out the media and entertainment arm, NBC Universal and the health care arm as facing poor prospects in the near-term.On GE's almost two-hour conference call on Friday, analysts repeatedly asked the company's managers whether they needed to rethink strategy and whether a structural shake-up was in order."Maybe GE Capital and GE Industrial shouldn't be together anymore," Scott Davis of Morgan Stanley told GE's Immelt on the call. Immelt answered: "No matter what form the company is in, it is about driving revenue growth, earnings growth ... We will see when this year ends how we stack up against everybody else." Analysts on the call were "just totally negative", said Al Meyers, co-manager of the AHA Diversified Equity Fund, which owns GE shares. "You either believe management or you don't," Meyers said. GE should take advantage of its triple-A credit rating by snapping up bargain assets for its finance operations, he said, rather than by getting out of the business because times have gone bad.
Heymann singled out the media and entertainment arm, NBC Universal and the health care arm as facing poor prospects in the near-term.On GE's almost two-hour conference call on Friday, analysts repeatedly asked the company's managers whether they needed to rethink strategy and whether a structural shake-up was in order."Maybe GE Capital and GE Industrial shouldn't be together anymore," Scott Davis of Morgan Stanley told GE's Immelt on the call. Immelt answered: "No matter what form the company is in, it is about driving revenue growth, earnings growth ... We will see when this year ends how we stack up against everybody else." Analysts on the call were "just totally negative", said Al Meyers, co-manager of the AHA Diversified Equity Fund, which owns GE shares. "You either believe management or you don't," Meyers said. GE should take advantage of its triple-A credit rating by snapping up bargain assets for its finance operations, he said, rather than by getting out of the business because times have gone bad.
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