If investing were only about numbers, then the math Ph.D.s would have all the money. But they don't. While numbers are very important and provide the majority of an investment decision, other elements come into play that are critical to any stock's success. They're hard to find sometimes but always worth the effort.

If you can discover these elements in a stock and great numbers, too, you've got all the odds for investing success in your favor.

The number one, most important piece of the investing puzzle is management. Management is everything. It's where all ideas begin and execution of them is implemented. Management can turn around a bad company and make it great. Management can take a good idea and turn it into a successful business.

Continue reading Comfort Zone Investing: Successful Stocks -- More Than Numbers

Comfort Zone Investing: Successful Stocks -- More Than Numbers originally appeared on BloggingStocks on Sat, 20 Feb 2010 10:30:00 EST. Please see our terms for use of feeds.

DailyFinance today: Smith & Wesson, Ruger shares up, new PPI numbers, Jack Welch appeals for AIG calm, and activists hound CNBC originally appeared on BloggingStocks on Tue, 17 Mar 2009 18:45:00 EST. Please see our terms for use of feeds.

"On the face of it, shareholder value is the dumbest idea in the world," he told the Financial Times. "Shareholder value is a result, not a strategy . . . Your main constituencies are your employees, your customers and your products."

"It is a dumb idea," he said. "The idea that shareholder value is a strategy is insane. It is the product of your combined efforts - from the management to the employees."

Continue reading Jack Welch is a big fat idiot

Jack Welch is a big fat idiot originally appeared on BloggingStocks on Fri, 13 Mar 2009 14:00:00 EST. Please see our terms for use of feeds.

General Electric Company (NYSE: GE) will miss its earnings forecast by 6%. GE now estimates that its third quarter profits will range between "43 cents to 48 cents a share, less than its previous forecast of 50 cents to 54 cents." GE cited "difficult conditions in the financial services markets" for its decision to stop its stock buyback program.

The good news -- if it can be compared -- is that this latest downward guidance would be less in percentage terms than its first quarter earnings miss of 14%. That was when GE reported 44 cents a share, compared with the 51 cents that analysts had expected. That unpleasant surprise spurred former CEO Jack Welch into a homicidal rage. With its stock trading 58% below its all time high of $58.50 back in September 2000 and down 41% from the $41 it traded at when Jeffrey Immelt took over as CEO, I am beginning to wonder how close GE is to going the way of Lehman Brothers.

The thing about GE is that it gets 40% of its pretax profit from financial services. But it also sells stuff like jet engines, power plants, magnetic resonance imaging (MRI) machines and TV advertising. Unfortunately, many of these big-ticket items depend on healthy growth in infrastructure spending by countries like China, India and Middle Eastern oil producers.

Continue reading GE cuts earnings forecast, stops stock buyback

GE cuts earnings forecast, stops stock buyback originally appeared on BloggingStocks on Thu, 25 Sep 2008 09:39:00 EST. Please see our terms for use of feeds.

Wall Street analysts are known for being too optimistic about earnings at the companies that they cover, but the problem may be getting out of control.

According to The Wall Street Journal, "Collectively, analysts expect S&P 500 earnings to expand by 23.9% in 2009, according to Thomson Reuters. The index does include a number of banks."

The prediction may be why analysts do not have a very good reputation with many investors. Well-regarded experts from Warren Buffett to Jack Welch believe next year could be one of the worst economic periods in decades.

Part of the thinking among analysts is that spending for consumer durables will be good. Since gas and food prices are still fairly high and consumer spending is on life support, it is very difficult to see how that point of view could be justified.

Analysts cost big banks and brokerage firms a lot of money. If the financial trouble on Wall Street gets worse, they may be among the next wave of employees fired. If their forecasts are so ridiculous, that will make a lot of sense.

Douglas A. McIntyre is an editor at 24/7 Wall St.

Analysts expect huge increase in earnings next year originally appeared on BloggingStocks on Thu, 25 Sep 2008 04:36:00 EST. Please see our terms for use of feeds.

The world's wealthiest man threw a baseball to the most respected CEO of his generation. And it all happened last night in Boston, home of the 2007 World Champion Red Sox, according to CNBC.com.

Who am I talking about? Berkshire Hathaway Inc (NYSE: BRK.A) CEO, Warren Buffett, was the pitcher, and retired General Electric Company's (NYSE: GE) Chairman and CEO, Jack Welch played catcher at Boston's Fenway Park.

CNBC reports that the pitch "was 'a little high and outside,' but it certainly didn't bounce four or five times before reaching the plate, as [CNBC thought he predicted] when he first told [CNBC] he'd be making his Fenway debut."

No comment was available on Welch's catching skills.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares, is a lifelong Red Sox fan, and has no financial interest in Berkshire Hathaway.

Warren Buffett throws first pitch to Jack Welch at Red Sox game originally appeared on BloggingStocks on Wed, 10 Sep 2008 17:20:00 EST. Please see our terms for use of feeds.

Continue reading Why haven't the Republicans said much about the economy?

Why haven't the Republicans said much about the economy? originally appeared on BloggingStocks on Fri, 05 Sep 2008 15:07:00 EST. Please see our terms for use of feeds.

General Electric Company (NYSE: GE) is scheduled to report second quarter earnings this Friday. Ten analysts that Zacks surveys expect GE to make 53 cents a share, the same as it did in 2007. Given that 0% growth rate, GE's forward Price/Earnings ratio of 12.1 seems a bit on the high side.

But after the spanking that CEO Jeff Immelt took after missing in the first quarter by 13.7%, he could be guiding analysts lower only to surprise them on the upside. This makes me wonder whether analysts have a higher, whisper number in mind. GE stock is down 32% since Immelt took over on September 7, 2001, but with the exception of the first quarter, over the last five years GE has increased earnings at an 8.1% annual rate.

If it got back on that track in the second quarter, then investors would expect GE to earn 57 cents a share, instead of the official 53 cents. In that case, GE stock would fall unless it exceeded 57 cents a share. I have not been able to determine whether there is such a whisper number floating around Wall Street, but there's no question in my mind that Immelt cannot afford to report a number less than 53 cents a share if he wants to keep his job.

Continue reading Can GE beat its whisper number?

Can GE beat its whisper number? originally appeared on BloggingStocks on Tue, 08 Jul 2008 12:37:00 EST. Please see our terms for use of feeds.

Continue reading Media World: The most overexposed people in business media

Media World: The most overexposed people in business media originally appeared on BloggingStocks on Mon, 02 Jun 2008 15:48:00 EST. Please see our terms for use of feeds.

AP reports that General Electric Company (NYSE: GE) CEO Jeff Immelt did quite a bit of whining at today's shareholder meeting in Erie, PA. But he did announce one piece of news that might help GE's stock: GE will increase its planned cost cutting from $2 billion to $3 billion. Yet I think he's still smarting from Jack Welch's threat to shoot Immelt on GE's CNBC last week.

Immelt whined on two fronts: the tough economy and how his buying and selling of GE business units is not appreciated. Here's what he said about the economy: "We are in the toughest economy since 2001 and the worst housing crisis since the Depression. Banks have written off more than $250 billion. . . . Days of easy credit have turned into months of no credit at all. While I am confident about the economy long term, we could see even more difficult times ahead."

And on the matter of GE's portfolio, Immelt exuded self-pity as he assailed his audience: "I would ask people to keep something in mind. In the last five or six years I've sold 50 or $60 billion of business. I've acquired 70 or $80 billion of business. This has probably been the most active portfolio change in the history of the company and it would be hard to find another industrial company that's done anything close to what we've done."

Continue reading GE's Immelt reduced to whining after homicidal rant from Jack Welch

GE's Immelt reduced to whining after homicidal rant from Jack Welch originally appeared on BloggingStocks on Wed, 23 Apr 2008 13:04:00 EST. Please see our terms for use of feeds.

Forbes reports that General Electric Company (NYSE: GE) ex-CEO Jack Welch is really angry with his successor Jeff Immelt. I don't know whether Welch still holds shares in GE but if he does, he can't be happy that they've fallen 20% since his hand-picked successor took over. But beyond the financial pain, Welch is suffering from a badly bruised ego -- that's because he prides himself on picking people. And he clearly blew it when he selected Immelt.

I saw Welch this morning sitting in the same spot I was in on GE's CNBC set last February during a stint on Squawk Box. And Welch had some choice words for Immelt. Forbes reports that Welch said "I'd be shocked beyond belief and I'd get a gun out and shoot him if he doesn't make what he promised now. Just deliver the earnings. Tell them you're going to grow 12 percent and deliver 12 percent."

I think the biggest problem for Welch is that it's become so obvious what a huge mistake he made in picking Immelt. As Welch said: "Here's the screw up: You made a promise that you'd deliver this and you missed three weeks later. Jeff has a credibility issue. He's getting his ass kicked. He apologized."

I've written about Immelt's mediocre performance since 2006. Maybe now that Jack Welch is chiming in, things will start to happen to boost GE's share price.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.

How Jeff Immelt is tarnishing Jack Welch's self-image originally appeared on BloggingStocks on Wed, 16 Apr 2008 17:53:00 EST. Please see our terms for use of feeds.

General Electric (NYSE: GE) was a darling of Wall Street for a couple of decades under the tutelage of legendary CEO Jack Welch. Mr. Welch retired in September 2001 turning the reins over to hand-picked successor Jeffrey Immelt. Give Immelt a break for the first 18 months as he had to guide the company through the 9-11 tragedy and of course the normal honeymoon period. Since that grace period expired in early 2003, GE has severely under performed the market and time has come for Mr. Immelt to hand the reigns over to someone else.

It is very difficult following a "legend" as Jack Welch. Many business schools model a course or two on management based on Welch's methods of letting an executive run a division creatively and freely--just return the expected numbers and all is well. Jack Welch "raised" Jeffrey Immelt in this style and picked him as the CEO to replace himself. The styles however were not transferable. Times and the global landscape have changed since Welch's departure.

Continue reading GE's Immelt should go now

GE's Immelt should go now originally appeared on BloggingStocks on Fri, 11 Apr 2008 16:31:00 EST. Please see our terms for use of feeds.

CNNMoney reports that General Electric Company (NYSE: GE) missed earnings expectations by a mile. Its net income fell 12% to $4.4 billion, or 44 cents per share, seven cents less than what Thomson Financial's polling of analysts had estimated.

In February I analyzed GE's breakup value and concluded that the stock was probably a bit overvalued. The big problem with today's earnings announcement was GE's financial services unit. Like Wall Street banks, GE suffered from "extraordinary disruption in the capital markets in March [which] affected our ability to complete asset sales and resulted in higher mark-to-market losses and impairments."

But that's not all. GE missed on revenues and lowered its guidance. Sales rose 8% to $42.2 billion, $1.5 billion below analysts' forecast of $43.7 billion. GE lowered its full year guidance to between $2.20 and $2.30 per share, reflecting flat to 5% growth. GE is down 11% in pre-market.

Since its current CEO, Jeff Immelt took over in September 2001, GE stock has fallen 20% from $41 to $33. Remind me again of why the "great" Jack Welch chose Immelt to succeed him.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter. He owns GE shares.

GE brings bad things to Wall Street originally appeared on BloggingStocks on Fri, 11 Apr 2008 09:00:00 EST. Please see our terms for use of feeds.

The September short interest in General Electric (NYSE: GE) fell 7.6 million shares to 59.7 million. The move is unusual because GE now trades near a multi-year high. It should not take more than a bit of bad news to push it down.

But, after over five years of under-performing the market after Jack Welch retired, GE shares are up 20% in the last year.

What happened? GE has been slowly dumping the dogs in its portfolio of companies. It has parted company with its plastics unit. There is also a feeling that the company has disclosed any mortgage problems in its loan portfolio, and that they are modest.

More important, though, the company has been on a multi-month investor relations drive to try to convince Wall St. that the company is worthy of a better valuation. It would appear, at the very least, that the company is considered a good place to invest when the financial markets are troubled.

GE is unlikely to convince skeptics that it is not in too many businesses. Almost no one can divine why the conglomerate owns NBC Universal. But, the performance of its infrastructure and industrial businesses appear to make up for that concern.

The firm's shares still lag the S&P by a bit on a five year measurement, and perhaps not as many investors are willing to gamble that the disparity will continue.

Douglas A. McIntyre is a partner at 247wallst.com.

Success of GE shares pushes down short interest originally appeared on BloggingStocks on Fri, 21 Sep 2007 09:45:00 EST. Please see our terms for use of feeds.

This is not Jack Welch's GE originally appeared on BloggingStocks on Tue, 18 Sep 2007 12:49:00 EST. Please see our terms for use of feeds.

Bob Nardelli's old boss Jack Welch seems to be one of the few people who think his appointment as the new Chrysler CEO is a good idea.

"This is an absolutely perfect fit,'' the former General Electric Co. (NYSE: GE) chief executive told Bloomberg News. ``They've got to get cost, efficiency, service -- all those things in line. He's the best in the world at that."

Neutron Jack goes even further saying his relationship with GE's unions were fabulous and that Chrysler has "got to have straightforward, no-baloney, on-the-table relationships with the unions there. And Bob is perfect for that.''

As I've argued before, Nardelli was a success at General Electric. Then again, he wasn't the boss either. When he got to Home Depot Inc. (NYSE: HD), he quickly became an imperial CEO who seemed to care little what shareholders, employees or the media thought of him.

Chrysler needs someone who isn't out to win any popularity contests. Tough decisions have to be made. But leaders also need to be good listeners and willing to compromise, two qualities that Nardelli just doesn't seem to have.

Bob Nardelli's appointment at Chrysler blessed by Jack Welch originally appeared on BloggingStocks on Wed, 08 Aug 2007 08:15:00 EST. Please see our terms for use of feeds.

Next Tuesday I am scheduled to meet with General Electric Co. (NYSE: GE) Chief Financial Officer Keith Sherin to discuss GE's performance and prospects. This meeting came at the company's initiation.

As a GE shareholder I have not been thrilled with the performance of the stock. Since September 7, 2001 when current CEO Jeff Immelt took over, the stock has risen 3% from $39.60, compared to a 40% increase in the S&P 500. Moreover, on the basis of its Price/Earnings to Growth (PEG) ratio of 1.5 -- based on a P/E of 19.5 and earnings forecast to grow 13% to $2.50 in 2008 -- GE looks somewhat overvalued to me.

So here are some questions I plan to ask:

• Since the current GE CEO took over, GE stock is up 3%, compared to a 40% increase in the S&P 500. Why has GE stock underperformed this average?
• GE stock has risen 23% in the last year, however, it trades at a PEG of 1.5 which makes it a bit expensive. Why should investors buy GE stock now?
• Since the Healthcare, Industrial and NBC Universal segments all saw revenues fall in the first half with relatively weak profit performance, why doesn't GE sell these businesses and invest the proceeds to increase its market share in the more financially successful Infrastructure and Commercial Finance units?
• If GE chooses to stay in Healthcare how will it offset the negative impact of the federal government's decision to cut reimbursements to nonhospital imaging centers?
• Under Jack Welch, GE's philosophy was to only be in businesses in which it could be #1 or #2. Recently NBC was ranked the 4th most watched network. Will GE sell NBC? If not, why is GE keeping NBC? How does NBC's coordination with other GE divisions increase GE's overall revenues or lower its costs?
• How vulnerable is the GE Money unit to an increase in consumer loan defaults? Is GE Money likely to experience accelerated revenue and profit growth in 2008 or slower growth? Why?
• What impact would a 10% decline in the dollar have on GE's Earnings Per Share (EPS)?
• What other external factors -- such as an increase in interest rates or a rise in energy prices -- represent the biggest risks to GE's EPS? How do you quantify those risks?

Please let me know which ones you'd like to add to the list.

Peter Cohan is president of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter. He owns General Electric stock.

What questions should I ask GE's CFO? originally appeared on BloggingStocks on Fri, 20 Jul 2007 11:00:00 EST. Please see our terms for use of feeds.

In recent months, we're seeing some of the most respected titans of finance making investments in industries that most individual investors wouldn't touch. While these investments might seem boring, the track records of these investors indicate that the returns could be anything but. Take a look:

On April 5th, I wrote about Carl Icahn's bid for WCI Communities, a real estate developer with interests in Florida, a state that has seen a lot of carnage in the real estate market of late. Mr. Icahn explained the investment like this: "My investment philosophy, generally, with exceptions, is to buy something when no one wants it. We made a fairly large investment and took control of several energy companies seven or eight years ago when they were way down. Housing is somewhat analogous."

Just as Icahn buys stuff when no one wants, Warren Buffett says that the secret to good investing is to be "greedy when others are fearful and fearful when others are greedy." A willingness to go against the commonly-held investment wisdom is at the core of the philosophies of both of these investors. On April 8th, BloggingStocks writer Jonathan Berr wrote that Warren Buffett's Berkshire Hathaway Inc. (NYSE:BRK.A) had become the largest shareholder of Burlington Northern Santa Fe Corp. (NYSE: BNI). Very few investors that I know would even look at railroad stocks and, while no official reason has been given for Buffett's investment yet, this may be one of the factors that attracted him.

Media mogul Sam Zell recently purchased Tribune Media, which is one of the major players in the newspaper industry, a product that has been in decline for some years. Warren Buffett himself, also a holder of several newspapers has lamented that every time an elderly person dies, newspapers lose a reader they will never get back. Jack Welch has also expressed interest in acquiring the Boston Globe.

When we examine the philosophies of these great investors, we see a common theme: They are all willing to go against the consensus, and make investments that appear puzzling to most people. To learn about integrating elements of contrarian investing into your regimen, check out David Dreman's Contrarian Investment Strategies, one of my favorite books of all time. Also read his monthly column in Forbes.

Contrarian Financiers: How to invest like they do originally appeared on BloggingStocks on Mon, 09 Apr 2007 17:16:00 EST. Please see our terms for use of feeds.

Ben Berkowitz is the business news editor for AOL. His weekly column looks at news stories with long-term significance that were initially overlooked.

The story you didn't read this week but should have is the almost off-handed way that super-billionaire Sam Zell said he'd perhaps like to buy Tribune Co. (NYSE: TRB). And if that wasn't enough, now everyone's favorite even-bigger billionaire Warren Buffett is said to be snapping up shares of the New York Times Co. (NYSE: NYT).

These titans of industry understand something that even the Internet has not changed: owning a newspaper is both a mark of prestige and an easy way to have a very loud voice. Anyone who thinks their motives are altruistic has perhaps been sniffing too much newsprint.

Sam Zell is a real-estate baron. What on earth would he do with a newspaper chain? (Yes, Trib also owns the Cubs, and some TV stations, and a few other properties, but the same question applies. There are easier ways to own a baseball team.)

Keep asking: why does housing developer and art patron Eli Broad want the Los Angeles Times? Or supermarket magnate Ron Burkle? Why would insurance heavyweight Hank Greenberg want the New York Times? Why does Jack Welch want the Boston Globe? Hint: remember the rumors about Welch trying to steer election coverage in various NBC newsrooms in 2000.

Simple: they want to control mainstream media outlets to push their agendas. Broad has a vision for changing the future of Los Angeles. Burkle is a big Democratic supporter. Greenberg has been abused mercilessly in the press for the financial doings at AIG. Welch's wife is a journalist.

The motives for Zell and Buffett are less clear; maybe Zell wants to take a crack at Trib for the sake of it? Great businessmen love challenges. And Buffett, well, just do what the man says. He buys it, you buy it. Really, he didn't get rich on his looks or fashion sense.

Continue reading The Story You Didn't Read: Moguls go newspaper crazy

The Story You Didn't Read: Moguls go newspaper crazy originally appeared on BloggingStocks on Fri, 09 Feb 2007 15:44:00 EST. Please see our terms for use of feeds.

Jeff Zucker appears to have won the race to succeed Robert Wright as CEO of General Electric Company's (NYSE: GE) NBC Universal. I'm not sure if this is good for GE shareholders.

Zucker, who famously produced the Today Show and extended Friends's popular run, has seen NBC's ratings stumble to fourth place. Although he has championed some shows that have done well -- such as Sunday Night Football and Heroes -- the reality remains that NBC used to be first and it's not anymore. A few weeks ago, CNNMoney reported that NBC was behind The Walt Disney Company's (NYSE: DIS) ABC and CBS Corporation's (NYSE: CBS) CBS in the Nielsen ratings for the coveted 18 to 49 year old demographic group.

In addition to the weak ratings, NBC's numbers are not too hot either. While its revenues grew 10% to $16.2 billion in 2006, its operating profit fell 6% to $2.9 billion. As a proportion of GE's total, NBC contributed to 10% of GE revenues in 2005 and 2006 during which time NBC's operating income contribution fell from 13% to 11% of GE's total. This performance is not bad, but it's not spectacular either.

Continue reading Is Zucker good for NBC Universal?

Is Zucker good for NBC Universal? originally appeared on BloggingStocks on Mon, 05 Feb 2007 12:51:00 EST. Please see our terms for use of feeds.