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Bonds Are a 'Safe' Investment: A Big Lie Gets Even BiggerGeneral Electric Co.'s (NYSE:GE) stock has had a nice run recently. It is up 10% over the last three months, outpacing the S&P. However shares in Its major rival, Siemens AG (NYSE:SI) are up 30% despite a bribery scandal that cost both its chairman and its CEO their jobs.
With the sales of its plastics unit, investors want to believe that the company will dump some of its dogs and focus on businesses that have high margins and good growth prospects. GE management continues to insist that its forays into India and China will help pump revenue in the years ahead.
The concern about GE that lingers is that it is not a company, but rather it is a collection of companies which have little to do with one another. The structure disguises the real value, or lack thereof, in each part.
On April 13, GE announced first quarter earnings. Net was up 2%, hurt in part by sub-prime mortgage issues at the company's financial services business.
Short interest in GE's share rose 6.4 million to 60 million shares between May 15 and June 15. Perhaps the market realizes that most of GE's recent gain was on rumors that the company might be broken into two or more pieces. Barring that, GE will slip back into a pattern of meeting modest earnings. But, that will be the extent of it.
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Reader Comments (Page 1 of 1)
6-22-2007 @ 11:12AM
Bruce E Warnock said...
We are retired folks and owners of GE stock for a long time. GE is our largest holding in our retirement account. We look back at the year 2000 and the $60 price with dismay.
Time has come to take a close look at Jeff Immelt but GE has refused to separate the position of CEO and Chairman of the Board, and that must come first. We also own and have read the book "Jack - Straight from the Gut" and find it hard to see why Immelt is still there. Look at what former GE executive Nardelli did to HD and what it cost to get rid of him. Sure glad he did not get the top GE spot.
Spinning off or selling parts of GE that do not fit into its infrastructure business makes sense to me but Immelt would not want to give up his control, so I do not see this under his reign.
When a great company like GE languishes for over 5-7 years, it is long past time to look at its management. What is the Board waiting for? GE is the last company in the original DJIA and its Board should not be satisfied with its performance since Jack Welch retired.
6-22-2007 @ 4:04PM
Joseph said...
Someone is going to make a substantial gain on owning GE stock. But I don't see us individual
holders as the lucky ones.I can see the fat retirement packages being prepared now, for you know who and his cronies.
Wake UP SHAREHOLDERS,Let Immelt know something must be wrong.
6-22-2007 @ 4:33PM
Bruce E Warnock said...
Here is an example of just how far behind GE has fallen during Immelt's tenure.
We live in Ohio and our NBC station broadcasts news in HD and the picture is great. During the day we watch its news channel, CNBC, which transmits in the old analog format. When we asked why, they only replied "we do not offer that".
Why does the senior GE management tolerate that level of performance? Is this what GE has become after Jack Welch retired? Is this attitude what has permeated GE in the last 7 years? I surely nope not, but if so, no wonder the stock is no longer $60.
It is time for a change at GE and the time is now.