Granitepost Posted February 27, 2009 Share Posted February 27, 2009 The Board of Directors authorized a plan to reduce GE's quarterly dividend to $0.10 from $0.31 per outstanding share of common stock, effective for the second half of 2009. This reduction will likely not be a surprise to the market and should help it retain its AAA rating so I would expect many holders of GE shares to be pleased that the decision has been made. Link to comment Share on other sites More sharing options...
Parsad Posted February 27, 2009 Share Posted February 27, 2009 It was the prudent thing to do. I'm glad they thought about it and decided that capital in their hands would probably be better served in this environment than simply paying it out to shareholders. Cheers! Link to comment Share on other sites More sharing options...
frog03 Posted February 28, 2009 Share Posted February 28, 2009 The CEO did not want to choose between the dividend and AAA. First goes the dividend, and I'd be surprised to not see the AAA rating gone by the end of the year. extremely likely GE has no tangible equity at the end of Q1. Link to comment Share on other sites More sharing options...
Hoodlum Posted March 2, 2009 Share Posted March 2, 2009 Lots of uncertainty with GE. General Electric Falls Again As Credit Rtgs Remain In Focus But even the cut couldn't stem fears that the rating was in danger, as Standard & Poor's and Moody's both said later Friday they would leave their negative outlook unchanged. Moody's analyst Richard Lane said in a Friday release that "the reduction in GE's common dividend will address some of the concerns regarding the stress on GE's cash flow" but reiterated that deteriorating asset qualities and tight credit markets make it still vulnerable to a cut. If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts. Monday, equity analysts also remained in doubt the move would prove a cure-all for GE's problems, though they applauded it as necessary anyway. "We don't expect the incremental dividend reduction to translate to a corresponding increase in liquidity since we never expected GE's cash flow from operating activities (COFA) in 2009 would adequately fund GE's prior dividend payouts," analysts at Sterne Agee said in a Monday note. "We currently believe Moody's is likely to reduce GE's credit rating sometime during mid-late March, 2009, which is likely to be quickly followed by other rating agencies." Link to comment Share on other sites More sharing options...
alertmeipp Posted March 3, 2009 Share Posted March 3, 2009 >If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts. Again, GE CEO says that's not the case, media just like report what the think rather than facts these days. GE has access to the CP program backed by Fed - many of its competitors don't. verify verify verify Link to comment Share on other sites More sharing options...
cheapguy Posted March 3, 2009 Share Posted March 3, 2009 Albertmeipp, Can we put a number on the impact of losing the coveted AAA rating. How much debt has to be refinanced, or additional collateral to be deposited ? When is that debt due ? Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ? How about writing the Puts for strike price of $5 which expire in Jan 2010. they are going for $1.20. So we will break even until $3.80 If ge goes below that, then we lose money. Link to comment Share on other sites More sharing options...
cheapguy Posted March 3, 2009 Share Posted March 3, 2009 Albertmeipp, Can we put a number on the impact of losing the coveted AAA rating. How much debt has to be refinanced, or additional collateral to be deposited ? When is that debt due ? Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ? How about writing the Puts for strike price of $5 which expire in Jan 2010. they are going for $1.20. So we will break even until $3.80 If ge goes below that, then we lose money. Link to comment Share on other sites More sharing options...
Granitepost Posted March 3, 2009 Author Share Posted March 3, 2009 Immelt's Feb 6 letter to shareholders refers to an opportunity of a lifetime. Yesterday when GE shares reached their lowest level since May 1993, he apparently purchased 50,000 GE shares. See: http://www.bloomberg.com/apps/news?pid=20601109&sid=aMCn1opZjxQc&refer=home Link to comment Share on other sites More sharing options...
ExpectedValue Posted March 3, 2009 Share Posted March 3, 2009 >If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts. Again, GE CEO says that's not the case, media just like report what the think rather than facts these days. GE has access to the CP program backed by Fed - many of its competitors don't. verify verify verify He's the CEO. He's supposed to be a cheerleader for the company. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 The funniest thing about everyone freaking out about GE and GE Capital is that the division was profitable last year. Link to comment Share on other sites More sharing options...
bfrank1 Posted March 3, 2009 Share Posted March 3, 2009 BofA and MS were profitable last year as well. Does that mean there is nothing to worry about there either? Would either of these be alive (independent) today without having received massive amounts of capital from the government? Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 BAC would be totally fine if they had never contracted to purchase and subsequently forced to buy Merrill. North Carolina isn't Wall Street. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 In fact, BAC is probably way more fine than its $20B market cap would suggest ( or whatever it is now, it's rather difficult to determine the number of shares outstanding sometimes). Any draconian prediction of losses from Merrill has been totally absolved by the government. Soros' theory of reflexivity is truly at work here. Link to comment Share on other sites More sharing options...
Santayana Posted March 3, 2009 Share Posted March 3, 2009 How was BAC "forced" to buy Merrill? Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 In Merrill Deal, U.S. Played Hardball http://online.wsj.com/article/SB123379687205650255.html?mod=testMod Link to comment Share on other sites More sharing options...
ExpectedValue Posted March 3, 2009 Share Posted March 3, 2009 They weren't forced. They had taken TARP money, as a result they had to cede some control. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 The original TARP money was involuntary. BB&T didn't need the TARP, either did BAC at the time. And now they have it. Link to comment Share on other sites More sharing options...
ExpectedValue Posted March 3, 2009 Share Posted March 3, 2009 BAC didn't need TARP money? Why then did they do a common stock offering days before in a feeble attempt to raise capital? Link to comment Share on other sites More sharing options...
Santayana Posted March 3, 2009 Share Posted March 3, 2009 Can't read the full article without a subscription. How does it say they were forced to buy Merrill? Was their banking charter going to be revoked if they didn't? Nobody was "forced" to take the original TARP money. They just didn't like the alternatives, as in having their capital ratios subject to immediate review. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 The original TARP money in September was involuntary. They didn't need to sell stock until contracting to purchase Merrill. I'm not saying BAC is perfect but it is a mis-characterization to lump them in with Citi. I would sell stock too if I was buying an over-leveraged cowboy I-bank. I definitely wouldn't argue with the ML deal being an impulsive mistake. At least it wasn't for cash though. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 The 9 (I believe) largest were forced to take the original TARP money. WFC and BBT didn't want or need it but they got it. This is true unless everything in the papers is bologna. ;) Link to comment Share on other sites More sharing options...
Santayana Posted March 3, 2009 Share Posted March 3, 2009 I still have never seen any characterization of how any of the TARP banks were forced to do anything. Yes I've seen suggestions of that in the papers, but I also remember reading that the sub-prime problems were "well contained". I've seen numerous times since TARP that the institutions are welcome to pay back the money any time, there is no early pre-payment penalty. So if they were forced to take the money, why don't they just pay it back? Link to comment Share on other sites More sharing options...
Vish_ram Posted March 3, 2009 Share Posted March 3, 2009 Bernanke and Paulson played hardball with Lewis. They said if you dont buy Merrill, then we wont be so friendly if you come to us for any funds later. I think they also said they may ask for management change. Link to comment Share on other sites More sharing options...
JAllen Posted March 3, 2009 Share Posted March 3, 2009 The article about the original (September/Involuntary/first round of the original TARP) TARP injections that I read in the WSJ is too old so now it is archived. The funds were involuntary injections of capital though. The 9 largest banks were forced to take the funds. The article detailed quotes from the meeting about how Stumpf ( or is it Kovacevich) didn't want to take the money and Paulson told them that they had to. Again, this is all predicated upon what was said in the article, and other articles I have read on being true. Link to comment Share on other sites More sharing options...
turar Posted March 3, 2009 Share Posted March 3, 2009 Here's a link to another article somewhat talking about it. http://money.cnn.com/2009/01/30/news/companies/tully_bofa.fortune/index.htm Link to comment Share on other sites More sharing options...
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