GE - General Electric

[cubsfan]

the finance business would be toast if it was not for US Government bailout, and Buffett bailout. It was insolvent. Buffett likes Immelt. Hates GE Capital, apparently.

 

I just came across this quote from Munger from 2005's Wesco's meeting notes:

 

 

AIG, GE Credit and the Risks of the Carry Trade

 

That said, it’s a lot like GE. It is a fabulously successful insurance operator, and with success it morphed into a massive carry business: borrowing a lot of money at one price and investing it at another price. AIG was a big operator that was a lot like GE Credit. We never owned either because even the best and wisest people make us nervous in great big credit operations with swollen balance sheets. It just makes me nervous, that many people borrowing so many billions.

 

As you can tell in our operations, we are much more conservative. We borrow less, on more favorable terms. We’re happier with less leverage. They’ve been successful, but we’re too chicken to join them. You could argue that we’ve been wrong, and that it’s cost us a fortune, but that doesn’t bother us. Missing out on some opportunity never bothers us. What’s wrong with someone getting a little richer than you? It’s crazy to

worry about this.

 

There’s a lot of leverage in those carry-trade games. Other people are more certain than I am that aircraft can always be leased.

 

Boy the more I read historical stuff like this from Munger, the more he looks like a genius.

[fareastwarriors]

http://www.bloomberg.com/news/2013-05-22/ge-weighs-ipo-for-parts-of-shrinking-finance-business.html

 

GE Weighs IPO for Parts of Shrinking Finance Business

 

[fareastwarriors]

http://online.wsj.com/article/SB10001424127887323728204578517072303927436.html?mod=WSJ_business_whatsNews

 

GE Capital Agrees to Sell $1.36 Billion in Assets .

 

 

General Electric Co.'s GE +0.30%financial business has agreed to sell an $807 million portfolio of properties to American Realty Capital Properties Inc. ARCP -2.57%just days after Chief Executive Jeff Immelt said the company is examining a range of strategic options for parts of GE Capital.

 

GE Capital also agreed to sell its Canadian vehicle-fleet portfolio to Element Financial Corp. EFN.T +2.23%for about $552 million. It agreed to form an alliance with Element Financial to deliver fleet financing and management services to cross-border customers in Canada and the U.S.

 

 

[Guest wellmont]

immelt does not want to go into the next crisis levered like he did the last one.

[fareastwarriors]

GE Capital says US council proposed designating it systemic

 

 

http://in.reuters.com/article/2013/06/04/financial-regulation-gecapital-idINL1N0EF23X20130604

[fareastwarriors]

GE's Sherin to Head Finance Arm .

 

 

General Electric Co. GE +2.05%Chief Financial Officer Keith Sherin is poised to take over as head of the company's finance arm, a move that will put a veteran executive in charge of GE Capital as it prepares to face greater regulatory oversight.

 

 

http://online.wsj.com/article/SB10001424127887324069104578531512342899132.html?mod=WSJ_hp_LEFTWhatsNewsCollection

[fareastwarriors]

.GE Hiring Thousands of Engineers to Build Industrial Web

 

 

http://www.bloomberg.com/news/2013-06-17/ge-hiring-thousands-of-engineers-to-build-industrial-web.html

[fareastwarriors]

http://www.cnbc.com/id/100897030

 

General Electric posted a decline in quarterly profit and revenue on Friday on weakness in its finance unit, but its order book rose, sending shares up 2.4 percent in early trading.

 

Overall profit beat expectations by a penny as the conglomerate cut costs and kept orders mostly steady for its turbines and other industrial machinery.

 

 

 

 

GE said its order book, an indicator of how much work it has received from customers, was up 4 percent globally and 20 percent in the U.S., a jump that surprised investors.

 

 

[fareastwarriors]

http://online.wsj.com/article/SB10001424127887323514404578652533484101340.html?mod=WSJ_business_MoreArticles

 

GE Ends Solar-Panel Push, Sells Technology to First Solar

 

General Electric Co. GE -0.86%is abandoning plans to manufacture solar panels amid a market glut and sold the technology it has built up over the last half decade to First Solar Inc. FSLR -2.32%

Meanwhile, First Solar reported a 70% drop in profit and cut its forecast for the year as two large sales were delayed, sending its shares sharply lower in late trading on Tuesday.

 

The two developments were sour notes for an renewable-power business that continues to be pressured by weak solar-panel prices and overcapacity.

 

Under the deal, GE is selling First Solar its technology for making thin-film solar panels in exchange for 1.75 million shares of the solar technology company's stock. Those shares, which would give GE a 2% stake in Tempe, Ariz.-based First Solar, were valued at $81.8 million at Tuesday's close but had already shed 9% of their value in after-hours trading.

...

[fareastwarriors]

http://online.wsj.com/article/SB10001424127887324769704579009071517729420.html?mod=WSJ_hp_LEFTWhatsNewsCollection

 

Blackstone to Buy Stakes in Apartment Complexes From GE Unit

 

 

The private-equity firm has agreed to buy majority stakes in about 80 apartment complexes from the financing arm of General Electric Co. GE +0.08%in a deal that values the portfolio at $2.7 billion, according to people familiar with the agreement. The apartment buildings with roughly 30,000 units are in Dallas, Atlanta and other parts of Texas and the Southeast.

 

 

[fareastwarriors]

http://www.breakingviews.com/plummeting-blackberry-would-stain-any-buyout/21101751.article

 

 

GE Answers Abe’s Call to Spur Funding to Japan Ventures

[fareastwarriors]

http://online.wsj.com/article/SB10001424127887324324404579043251576214402.html?mod=WSJ_Markets_LEFTTopStories

 

GE Set to Exit Retail Lending

 

 

...

 

 

GE has said the U.S. consumer-finance business earned $2.2 billion last year. The operation accounts for about $50 billion of the $274 billion in loans outstanding by GE Capital.

 

An IPO could come early next year, the people said. Bankers from J.P. Morgan Chase & Co. and Goldman Sachs Group Inc. GS +0.43% are working on a possible offering, one of the people said. Alternatives including smaller spinoffs or asset sales are under consideration, the people said.

 

...

[fareastwarriors]

http://www.bloomberg.com/news/2013-09-18/ge-shake-up-puts-youngest-leader-at-helm-of-fastest-growing-unit.html

 

 

GE Shake-Up Puts Youngest Leader at Helm of Fastest-Growing Unit

 

[fareastwarriors]

http://www.nytimes.com/2013/09/27/business/as-some-companies-turn-to-health-exchanges-ge-goes-another-direction.html?pagewanted=all&_r=0

 

 

As Some Companies Turn to Health Exchanges, G.E. Seeks a New Path

[fareastwarriors]

Road Too Far: GE Strains to Deliver Energy Colossus

 

http://online.wsj.com/news/articles/SB10001424052702304384104579139842107036238?mod=WSJ_business_whatsNews

[fareastwarriors]

GE's Lost Decade

 

http://www.businessweek.com/articles/2013-12-05/ge-shareholders-see-zero-total-return-since-immelt-became-ceo#r=hpt-fs

[james22]

Analysis : GE shuffle signals growing importance of oil & gas unit

 

http://www.reuters.com/article/2013/09/19/us-ge-oilandgas-idUSBRE98I0J920130919

[fareastwarriors]

http://www.breakingviews.com/can-general-electric-keep-the-activists-at-bay?/21125357.article

 

Can General Electric keep the activists at bay?

[fareastwarriors]

GE's Immelt Still Trying to Restore Power

 

 

http://online.wsj.com/news/articles/SB10001424052702304419104579324812614721436?mod=Markets_newsreel_3

 

 

Talk about a hard act to follow.

 

In Jack Welch's final decade at the helm of General Electric Co. GE -0.51% , the conglomerate's valuation based on forward earnings was a third higher on average than that of the U.S. manufacturing sector. Current chief Jeffrey Immelt's tenure, which began a few days before the Sept. 11 terrorist attacks, has seen the shares trade merely in line with its peers on average—about what they fetch today.

 

GE's price/earnings multiple sank even in the face of respectable earnings growth up until the financial crisis, and tumbled after its huge GE Capital unit threatened the parent's solvency. Total shareholder return since Mr. Immelt took over has been essentially zero compared with 112% for the S&P 500.

 

That includes a huge rebound since the crisis, during which time management's emphasis has been on GE's industrial roots. Expect more of the same on Friday when fourth-quarter results are reported.

 

Analysts expect earnings per share of 51 cents compared with 38 cents a year earlier. Highlights should include further growth in GE's bulging order book, which most recently hit $229 billion, and progress on an initial public offering of its credit-card unit later this year.

 

That transaction, to be followed by a full spinoff of the business in 2015, would be a major step in Mr. Immelt's goal of reducing GE Capital's profit contribution to just 30% of the total by 2016. It was over half before the crisis. At the moment, GE Capital's balance sheet still would make it America's fifth-largest bank.

 

Not only will Mr. Immelt's plan make GE less vulnerable in the event of another financial swoon, it also should induce investors to pay more for each dollar of remaining earnings. GE trades at a small discount to the average of seven competitors in industrial equipment on projected forward earnings. Conversely, three credit-card issuers trade at a 21% discount to GE while five large American banks trade at a 27% discount.

 

Even with a third of earnings still coming from finance, GE would deserve to trade at a premium to competitors. The remainder of GE Capital such as aircraft leasing and equipment finance has clear synergies with manufacturing.

 

In that case, Mr. Immelt should finally be able to emerge from his legendary predecessor's shadow.

[gary17]

Uccmal. And others who have looked at GE:

 

I'm wondering if you thought about the pricing power of GE over the long term... a lot of the stuff that GE makes appears to get cheaper over time... I'm in this midst of this thinking of just how important this factor is for the company's long term profitability. Clearly if we simply look at the chart from 1980- it's appreciated many, many folds, whilst the products they make become more affordable to their customers. Perhaps the rate of sales out paced the declined in pricing by a wide enough margin that's not an issue. But I haven't seen any scientific  scientific or non scientific discussion on this... be interested to hear your thoughts. tia.

 

 

GE still has alot going for it.  There is the non-capital business such as:

Medical Systems - long term sales and servicing agreements - quality and service are paramount

Power Systems - turbines etc.  - huge business

Motors

Alt Energy - mentioned above

Water treatment - relatively new and growing

Military related

 

In Capital there are a number of business that are not directly connected to mortgages Commercial or otherwise:

Fleet Services - Worlds largest auto fleet - leasing

Modular trailers

Credit companies - i.e. they own the receivables for the Hudson's Bay Company in Canada

 

One of the big ones operates at the interface between Capital and industrial - they finance their own customers to buy industrial products.  When done well this works well.   

[VersaillesinNY]

This sounds good to me:

 

General Electric Said in Talks to Buy France’s Alstom

 

http://www.bloomberg.com/news/2014-04-23/ge-said-in-talks-to-buy-france-s-alstom-for-about-13-billion.html

[VersaillesinNY]

The 113-Year Old Livermore Light Bulb and the 1924 secret bulb cartel

 

I found this story fascinating, some of you might enjoy it too.

 

LIVERMORE -- Imagine a world in which light bulbs never die.

 

People could live their whole lives without ever scorching their fingertips trying to change an incandescent bulb. Long after they were gone, the lights above their kitchen tables and bathroom mirrors would burn on.

 

That sci-fi vision might have become a reality if Adolphe Chaillet, inventor of Livermore's famous Centennial Light, and other early light bulb creators had continued on their way, according to the 2010 European documentary "The Light Bulb Conspiracy."

 

Livermore's bulb -- considered the world's longest burning as it nears 110 years -- is one of the stars of this illuminating film by director Cosima Dannoritzer, of Spain. On trial in "Conspiracy" is planned obsolescence -- the practice of deliberately designing products with limited life spans to drive consumerism.

 

"There's all these lovely conspiracy stories -- grannies always saying that everything used to last longer. I wanted to know (whether) that was just subjective or (if it) was really true," Dannoritzer said.

In fact, it was profit-driven scheming by industry titans, not technological limitations, that led to the evanescent incandescent bulbs of today, she contends.

 

In meticulous detail, the film lays out how, initially, manufacturers strove for long-lasting bulbs. Thomas Edison's first commercial bulb in 1881 lasted for 1,500 hours; soon, bulb-makers were proudly advertising 2,500-hour bulbs.

 

But in 1924, the main bulb manufacturers in America and Europe secretly formed a cartel to limit the average life of lamps to 1,000 hours, according to internal documents, Dannoritzer said. By the 1940s, 1,000-hour bulbs became the standard.

 

Eventually, the cartel was exposed, and in 1953, General Electric and other industry leaders were banned from limiting the light bulb's life span.

 

Although many patents have been awarded since, no super-long-lasting incandescent bulbs have succeeded commercially, the film argues.

 

Donated to Livermore's fire department in 1901, the Centennial Light was made by the defunct Shelby Electric Company in Shelby, Ohio, in the late 1800s. Documents suggest its inventor, Adolphe Chaillet, hoped to create a more efficient, long-lasting bulb.

 

"It struck me as almost ridiculous that this 100-year-old technology is still functioning. I thought for sure that all the physics must have been worked out," said Debora Katz, a U.S. Naval Academy physics professor who first learned about the bulb when it was featured on the "Mythbusters" television show.

 

Intrigued, she sent her students to dig up Chaillet's patent. Its contents were disappointing: Only the configuration of the filament and the shape of the handblown glass he used in an effort to reduce light refraction and better direct the bulb's light were described. Information that might have shed light on his bulb's life span, such as the composition of its filament and the gas surrounding it, were absent.

 

Livermore's bulb can't be tested directly for fear of destroying it, Katz said. Still, experiments conducted on identical Chaillet bulbs might hold clues.

 

To determine its thickness, Katz's team shined a laser on a Shelby filament and measured the pattern produced on a screen behind the bulb. The results showed Chaillet's filament was eight times thicker than that of a modern bulb.

 

Another difference is wattage. Modern household bulbs range from 40 to 200 watts -- the Centennial bulb now gives off 4 watts, about as strong as a night light. Thought to have been a 30-watt bulb when installed, the Livermore light seems to have decreased in power over time.

 

"You can think of it as sort of an animal with a low metabolism. It's giving us less energy per time, so it can keep on going longer," Katz said.

 

Other data add credence to the reports that the Centennial Light filament was carbon-based -- the norm before tungsten filaments were introduced in the early 1900s. The results are documented in "The Centennial Light Filament," a 2010 paper by one of Katz's former students.

 

Author Justin Felgar found the hotter the Shelby got, the more electricity got through it. The opposite is true for modern tungsten filaments, suggesting the Shelby filament is made of something else.

 

To determine its makeup, Katz said she wants to rip apart a Shelby bulb that isn't functioning and run its filament through the Naval Academy's particle accelerator -- hopefully before the Centennial Light's 110th birthday in June.

 

"Perhaps there's just some fluke with that particular (bulb)," Katz said, adding, "I think we should at least be able to talk about what the differences are between the Shelby bulb and the contemporary bulb. Whether those differences account for longevity, I don't know."

 

http://www.mercurynews.com/ci_17287091

 

http://www.sfgate.com/bayarea/article/Livermore-s-mysterious-lightbulb-burns-110-years-2460710.php

 

http://www.npr.org/templates/story/story.php?storyId=1124201

 

The Light Bulb Conspiracy - trailer:

 

Full Documentary: http://topdocumentaryfilms.com/light-bulb-conspiracy/

[boilermaker75]

http://finance.yahoo.com/news/ge-close-selling-nearly-real-094207788.html

 

http://www.wsj.com/articles/ge-prepared-to-exit-the-bulk-of-ge-capital-1428662109?mod=yahoo_hs

[Guest longinvestor]

http://finance.yahoo.com/news/ge-close-selling-nearly-real-094207788.html

 

http://www.wsj.com/articles/ge-prepared-to-exit-the-bulk-of-ge-capital-1428662109?mod=yahoo_hs

 

GE's story from the 90's to this is one for the history book. Nothing captures the rise of finance in our lives better than General Electric's foray into the razzle dazzle, apparently pandering to wall street. Until the music stopped in 2008! 

 

http://finance.yahoo.com/news/wall-street-stands-lose-lot-204244220.html

 

Word has it that the moniker "GE" came about to get rid  of "General Electric" and the perceived "old economy" image during the 90's.

 

Immelt is essentially undoing a decade or more of folly and has earned my respect for this. Hares lose and tortoises do win after all.

 

 

 

 

[fareastwarriors]

Spin out the industrial side and just stick with financial services.  :D haha