Conglomerate General Electric Company (GE) will be reporting its fourth quarter results before the market opens on Friday, with analysts expecting to see the company report $0.32 per share.

During the same period last year, GE had earnings of $0.28 per share.

Continue reading General Electric Fourth Quarter Earnings Preview

General Electric Fourth Quarter Earnings Preview originally appeared on BloggingStocks on Thu, 20 Jan 2011 17:30:00 EST. Please see our terms for use of feeds.

The money manager and editor of The Global Analyst explains, "The company's businesses are mostly doing well; the balance sheet is rock solid; and the shares are undervalued.

Continue reading Loews Corp. (L): Investing with the Tisch Family

Loews Corp. (L): Investing with the Tisch Family originally appeared on BloggingStocks on Thu, 12 Aug 2010 12:20:00 EST. Please see our terms for use of feeds.

"Loews (NYSE: L), the holding company of the New York-based Tisch family, is a way of buying a collection of good stocks at a discount, with much else thrown in free," says Adrian Day.

The editor of the top-notch The Global Analyst explains, "These value investors have a long record of buying quality assets cheaply when they are out of favor, nurturing them, and eventually monetizing them."

"Everyone loves a sale, right? Typically, the Tisch family buys major chunks of out-of-favor businesses, often publicly traded, and holds them for many years. They exemplify the important traits of successful value investors: discipline and patience.

"I calculate a New Asset Value for Loews-taking current (depressed) stock prices for its publicly traded holdings, the cash, and conservative valuations for the private assets-of almost $39 per share.

Continue reading Loews (L): Buying value assets at a discount

Loews (L): Buying value assets at a discount originally appeared on BloggingStocks on Wed, 18 Feb 2009 10:35:00 EST. Please see our terms for use of feeds.

General Electric Company (NYSE: GE) missed by a penny. But a look behind its corporate veil reveals a company that is not getting the so-called benefits of diversification. Instead, the great performance of one of its businesses is being overwhelmed by all the other businesses which are shrinking. My concern is what happens if that one business also takes a dive.

GE net income fell 44% to $3.65 billion and its earnings per share (EPS) from continuing operations was 36 cents -- analysts had expected 37. Here's the bad news:

• GE's financial-services business, GE Capital, made a profit of $383 million -- an 88% drop while its revenues fell 18%. Its CNBC cable channel reported that it would cut 7,000 jobs and save $2 billion.
  
• GE's consumer and industrial business suffered an 86% earnings decline as revenue fell 17%
• GE's television and movie network. NBC Universal suffered a 6.3% earnings decline while revenue slid 2.7% as declines at local stations -- presumably suffering from weak advertising demand -- were partially offset by strong cable earnings

Continue reading Energy Infrastructure shimmers as GE net falls 44%

Energy Infrastructure shimmers as GE net falls 44% originally appeared on BloggingStocks on Fri, 23 Jan 2009 10:00:00 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.

Continue reading Procter & Gamble has seen U.S. recessions start, and end, before

Procter & Gamble has seen U.S. recessions start, and end, before originally appeared on BloggingStocks on Tue, 25 Mar 2008 17:33:00 EST. Please see our terms for use of feeds.

Continue reading Don't confuse conglomerate Loews (LTR) with that other company

Don't confuse conglomerate Loews (LTR) with that other company originally appeared on BloggingStocks on Wed, 16 Jan 2008 17:12:00 EST. Please see our terms for use of feeds.

Siemens AG: Practically a mutual fund in one company originally appeared on BloggingStocks on Fri, 11 Jan 2008 13:00:00 EST. Please see our terms for use of feeds.

Olin Corp. has it covered, from bleach to bullets originally appeared on BloggingStocks on Wed, 02 Jan 2008 16:40:00 EST. Please see our terms for use of feeds.

Continue reading Philips solidifies health care presence with Respironics buy

Philips solidifies health care presence with Respironics buy originally appeared on BloggingStocks on Fri, 21 Dec 2007 19:39:00 EST. Please see our terms for use of feeds.

Marketwatch's John Dvorak has an interesting theory about Microsoft Corp. (NASDAQ: MSFT): It's turning into a holding company similar to the famous one controlled by Bill Gates' friend and bridge partner, Warren Buffett. He outlines this theory in two columns, which you can read here and here. Here's an excerpt outlining the central thesis:

Imagine Microsoft not as a big software company but as KKR or any of the private equity holding companies. Or Berkshire Hathaway.

If seen as such, I can think of numerous stand alone companies within the company already: an office productivity software company, a server software company, an operating systems software company, an email specialty company, an online service (MSN) company, a book publishing company, a mouse and keyboard manufacturing company, a game console company, a game software company, an online gaming company. You get the idea.

Dvorak may very well be right, but this isn't a change I think investors want to celebrate. While Berkshire Hathaway (NYSE: BRK.A) has had tremendous success, the reality is that the vast majority of conglomerates don't perform well. Acquisitions tend not to create long-term value, and if that's the way Microsoft is going to have to fuel growth ... investors should move along.

Cheering for Microsoft's rebirth as a holding company is like celebrating the fact that your 9-year old skips school to play basketball. Maybe he's the next Lebron James, but it's not likely.

Microsoft has a steep hill to climb back to relevance, and trying to go the conglomerate-route will probably only make it steeper.

Is Microsoft becoming a holding company? originally appeared on BloggingStocks on Sat, 20 Oct 2007 17:40:00 EST. Please see our terms for use of feeds.

3M Co. (NYSE: MMM) and Honeywell International Inc. (NYSE: HON) today reported better-than-expected third quarter results and raised their earnings guidance. But Caterpillar Inc. (NYSE: CAT) disappointed Wall Street and offered a gloomy outlook for the U.S. economy. That bad news pulled down 3M and Honeywell's shares, as well as pulling down the Dow Jones Industrial Average by triple digits.

"The third-quarter earnings that are coming out are the worst but we don't see a sharp bounce-back,'' Christina Bank & Trust's Scott Arminger told Bloomberg News. "Financial earnings will be pretty mediocre for a couple of quarters going forward.''

The maker of Post-It notes and countless other products reported net income of $960 million, or $1.32 per share, compared with $894 million, or $1.18 per share, a year earlier. Revenue rose 5.5% to $6.2 billion. Excluding one-time earnings, profit was $1.29 compared with $1.17 a year earlier. Analysts expected profit of $1.28 and revenue of $6.29 billion, according to Thomson Financial. 3M raised its earnings forecast to $5.54 to $5.62 for this year, compared with previous guidance of $5.40 to $5.60. It expects full year sales growth excluding the divestiture of the branded pharmaceutical business of 7% to 8%.

Honeywell's profit rose 14% to $618 million, or 81 cents per share and revenue rose 10 percent to $8.74 billion, helped by strength in its commercial aviation, defense and space markets. The results beat Wall Street consensus expectations of 82 cents on revenue of $8.59 billion.

Continue reading Caterpillar's gloomy outlook helps drag down market by triple digits

Caterpillar's gloomy outlook helps drag down market by triple digits originally appeared on BloggingStocks on Fri, 19 Oct 2007 10:41:00 EST. Please see our terms for use of feeds.

According to the Sunday New York Times, conglomerates are back. Companies like ITT Corp. (NYSE: ITT) and Textron Inc. (NYSE: TXT) are trading near multi-year highs. William Holstein writes:

To some extent, the new conglomerates have simply become lucky. They are riding a global infrastructure spending boom for airports and airlines, power systems, waste water and environmental projects, and hospitals and health care systems, not to mention record government spending on military projects and security surveillance. Their ability to assemble product offerings from different industries is a source of strength, they say.

While I'd be extremely skeptical if someone referred to the recent strength of conglomerates as some sort of new paradigm, it really may be different this time. The conglomerate boom of the 1960s and 1970s ended in disaster for many of the high-fliers, but changes have been made. Private equity firms have employed a conglomerate-like model to generate huge returns for their investors, and smarter management and more competent deal-making is leading to better-crafted hodgepodges of divergent businesses.

Honeywell International (NYSE: HON) CEO David Cote is also quoted in the Times piece: "When you look back at the history, the companies were put together without any real integration. They were really just holding companies. They didn't try to do anything to make the businesses better."

The old-time model of hyping the stock of a conglomerate and using it to acquire companies at a lower price/earnings multiple is no longer in vogue, mercifully.

For an interesting, although not entirely enjoyable, look at the history of the conglomerate business model, pick up a copy of The Rise and Fall of the Conglomerate Kings by Robert Sobel.

Conglomerates are back! Has anything changed? originally appeared on BloggingStocks on Sun, 05 Aug 2007 12:10:00 EST. Please see our terms for use of feeds.

General Electric Co. (NYSE: GE) trades at a 4% conglomerate discount. A conglomerate owns many different businesses -- which do not share resources. The rationale for conglomerates was that they allow investors to buy a diversified earnings stream -- when one business is up the other is down and vice versa. In theory this makes earnings smoother.

Finance theory suggests that conglomerates should trade at a discount to the stand alone value of those businesses. The reason for the conglomerate discount is that investors are able to construct a portfolio of stocks that will achieve the diversification themselves. Thus all the overhead needed to manage these diverse businesses under one umbrella adds cost without creating offsetting investment value.

One way to test this theory is to compare the weighted average price/earnings (P/E) ratios of the industries in which GE competes with GE's overall P/E. When I did this, I found that if each of GE's business units was a stand alone public company, its industry P/E weighted by its proportion of operating earnings to the total, averaged out to 19.9. This is substantially above GE's P/E of 19.1, suggesting that GE trades at a 4% conglomerate discount.

Continue reading Does GE trade at a discount?: A BloggingStocks series conclusion

Does GE trade at a discount?: A BloggingStocks series conclusion originally appeared on BloggingStocks on Mon, 30 Jul 2007 13:09:00 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.

United Technologies Corp. (NYSE: UTX), the second-most famous Connecticut-based conglomerate behind General Electric Co. (NYSE: GE), today raised profit and revenue forecast for the year and reported decent results as well.

Net income was $1.15 billion, or $1.16 per share. Gains across its lines of business ranging from Otis elevators to Sikorsky helicopters boosted sales by 13% to $13.9 billion. Analysts surveyed by Thomson Financial had expected earnings of $1.15 on revenue of $13.34 billion.

The company raised revenue guidance for the year to $53 billion from $51 billion and upped its EPS estimate to $4.15 to $4.25 from $4.05 to $4.20. Investors, though, apparently were expecting better, sending shares down in pre-market trading. Analysts expected earnings of $4.19 on sales of $52.4 billion, according to Thomson Financial.

Though United Technologies trails GE in market cap, it beats its larger rival in share performance. This year, shares of the Hartford-based company have jumped about 23%, more than double GE's 9%. The stock also is cheap with a multiple of 20.3 compared with GE's 19.6.

United Technologies earnings: UTC raises forecasts originally appeared on BloggingStocks on Wed, 18 Jul 2007 09:44:00 EST. Please see our terms for use of feeds.

Friday was a fascinating day for General Electric Co. (NYSE: GE); the shares were actually up $1 and trading volume was at 91 million shares, nearly triple the usual amount. The hoopla started when Citigroup research mentioned that GE should be broken up and spun off into separate companies. It's about time.

I have been writing about the possibility of GE splitting up for the past year for members of my website. It only makes sense. The problem with General Electric is that it has too many moving parts to properly predict consistent growth. GE is expected to generate revenues of $176 billion this year, with earnings per share of $2.22. For 2008, early consensus is for revenues of $196 billion and earnings per share of $2.48, barely a 10% increase over 2007.

Revenues are growing at slightly less than 10%. The 10% number is a magical number for Wall Street. If a company falls under that benchmark, serious questions about strategy and direction need to be asked -- and answered. Jeff Immelt, CEO, has been under the gun recently as the shares of GE have plodded along for the past six years in a narrow trading range. The bottom line is that there has been minimal growth for shareholders, but a decent dividend -- currently at $1.12, for a 3.1% yield.

GE has a market capitalization of $378 billion and is one of the most successful companies in the world. No question, investors who have owned the shares these past 20 years have been superbly and amply rewarded. The Jack Welch era saw skyrocketing growth of revenues and earnings, not to mention many new management principles crystallized in his books.

That was then -- this is now.

Continue reading General Electric: Breaking up is hard to do

General Electric: Breaking up is hard to do originally appeared on BloggingStocks on Sat, 28 Apr 2007 12:10:00 EST. Please see our terms for use of feeds.

When General Electric Co. (NYSE: GE) reports earnings Friday, the question on investors' minds will be whether the company's industrial and entertainment businesses can pick up the slack from the decline from the finance side.

Most of GE's growth has come from is finance businesses over the past decade, according to the Wall Street Journal (subscription required). That's going to change because its WMC Mortgage unit is a big player in the suprime mortgage market which has recently melted down.

WMC Mortgage rival New Century Financial Inc. (NYSE: NEW) filed for Chapter 11 bankruptcy protection. It remains unclear how badly the General Electric business has been affected though Reuters recently reported that WMC Mortgage had some of the worst-performing loans in the benchmark index for home equity asset-backed securities.

General Electric's strength is that if one of its businesses falters, others can make up for the shortfall.

Consider power generation. Remember that about 245 gigawats of new generating capacity will be needed by 2030, which is equal to about 817 new nuclear power plants, according to data from the Energy Information Administration posted on the Web site of the Edison Electric Institute, a utility trade group.

NBC Universal, long a laggard, is showing signs of life thanks to improvements in the NBC television network. No one should buy GE's stock just because they like "Deal or No Deal." That unit is the smallest by revenue, while its Infrastructure business, which includes power generation is the largest.

Analysts are expecting General Electric to have earnings of 44 cents on revenue of $39.83 billion, according to Thomson Financial.

Can GE's industrial businesses pick up the slack? originally appeared on BloggingStocks on Mon, 09 Apr 2007 09:00:00 EST. Please see our terms for use of feeds.

When I first saw that Wal-Mart Stores Inc. (NYSE:WMT) made it onto Fortune magazine's list of the Top 20 Most Admired Companies, I thought someone had dosed my coffee. But after refreshing my browser about a dozen times, I realized that I wasn't seeing things.

What's funny is that the editors of Fortune seemed just as surprised that the world's largest retailer was tied for 19th place with PepsiCo Inc. (NYSE:PEP) on the rankings devised from a survey by the magazine and the Hay Group of 3,322 executives, directors, and securities analysts.

"By most measures the retail giant had a rotten year: its first quarterly earnings decline in a decade, a skittish stock price, and a string of PR disasters (including a marketing chief who allegedly had an affair with a subordinate)," Fortune says, adding that its continued place on the role of honor "may be thanks in some measure to its new green strategy that includes everything from cutting back on packaging to pushing more energy-efficient light bulbs."

I don't agree. The positive publicity from Wal-Mart's environmental initiatives has been more than outweighed by the huge amount of negative publicity it gets for almost everything else. Ask the typical Wal-Mart shopper about the energy efficient light bulbs and I'll bet they have no idea what you are talking about.

Continue reading How does Wal-Mart wind up on Fortune's admired companies list?

How does Wal-Mart wind up on Fortune's admired companies list? originally appeared on BloggingStocks on Mon, 05 Mar 2007 17:59:00 EST. Please see our terms for use of feeds.

Tyco International Ltd. (NYSE:TYC) -- Tyco, which is being split into three companies, reported better-than-expected quarterly results. Net income rose 43 percent to $793 million, or 39 cents per share, compared with $556 million, or 27 cents. Revenue rose 8 percent to $10.3 billion. Profit from continuing operations was 45 cents, 1 cent better than Wall Street expectations, according to Reuters. Revenue was seen at $10.27 billion, the wire service said.

Ford Motor Co. (NYSE:F) -- Ford is bringing back the Taurus brand, according to Dow Jones Newswires. The struggling automaker will announce Wednesday at the Chicago auto show that its Ford Five Hundred mid-size sedan will be renamed after the once best-selling model, the wire service said. Chief Executive Alan Mulally has been a fan of the Taurus brand and there's been speculation in the press about its return, Dow Jones said. In other news, U.S. investors Nelson Peltz is reportedly the front runner to buy Ford's Aston Martin unit.

Wal-Mart Stores Inc. (NYSE:WMT) -- Wal-Mart became the latest company to offer downloads of movies and television shows. New movies will be available on the day of the DVD release for $12.88 to $19.88 with catalog titles starting at $7.50. TV shows will be $1.96 per episode. Kevin Swint, Wal-Mart's merchandise manager for digital media, called the new service "an unprecedented offering of video content, features and capabilities currently unmatched in the market." It has the support of major Hollywood studios.

Eastman Kodak Co. (NYSE:EK) -- Eastman Kodak Co. (NYSE:EK) is taking on Hewlett-Packard Co. (Nasdaq:HPQ) in the printer market. The film company today introduced a line of desktop printers and low-cost replacements inks.

Before the bell 2-06-07: Tyco, Ford, Wal-Mart, Kodak originally appeared on BloggingStocks on Tue, 06 Feb 2007 07:50:00 EST. Please see our terms for use of feeds.