YOU ASKED WHERE I WAS THE LAST TWO WEEKS I gave up on this board because it does not have serous posters - just kids playing around.
Dravos, you asked me for my take on General Electric and Nothing could be clearer than these points below.
For the next 3 quarters the comparison to the same 2020 quarters (Q2,Q3,and Q4) will be so radically improved that the "experts" will tell us GE has finally recovered. It is true that they have improved a lot, but General Electric is going into the easiest quarters they have ever had to easily beat last year's results (pandemic) and GE results will look very strong.
As for the sideways stock price, It is obvious to me that we have to wait 8 weeks until the Q2 results are announced and then the stock will jump up. Until then - it is trading sideways in a tight range. It will do that for the next 40 days. Volume is light and will remain light.
The stock has added about 200 institutions owing it from about 1,650 to around 1,850 funds. That trend has been going on since Christmas and that is the most encouraging thing you can imaging.
Q3 and Q4 will blow us out with the increased results. I predict larger Free Cash Flow and much higher prices on the stock. I am sure that Culp has totally understated his expectations.
I get tired of posts on this Board by people lamenting that Culp is getting a large bonus that is only to be paid in three years IF HE DOES PERFORM. If he performs -I will benefit. And so will everyone else. So they should keep it buttoned up and say less about his deal - which is already signed, sealed, and will be delivered.
I am encourage on the fast recovery of Aviation. Today the TSA said last weekend flying was at least 90% of same weekend 2019. The whole resistance to flying is disappearing and by the New Year it will return to normal.
I am thrilled that GE has announced lots of breakout new large sales and many futuristic break through ideas and products. They have new products in all three areas (Aviation, Renewables, Health). Any serious investor has to just wait for a bit (like baking a cake), but the results are so clearly optimistic that any patient person will be rewarded handsomely in the next 12 months.
I Iike that GE is paying down of debt, reducing overhead (labor and plants), changing philosophy to the 150,000 employees still engaged, and total smashing of a terrible problem division at GE Capital which was a nightmare for any person to understand as they compare results.
The 8:1 Reverse split is too early for the GE Board to call. The Board is waiting to at least July when Q2 is in. Maybe even longer but it definitely will happen. People on the Yahoo Board just keep nagging about it, but the reverse split is something you will see mimicked in the next years by other firms as a real clever pricing tool. It is really a stoke of genius to get the stock right sized.
The best comparison on what General Electric will look like after the 8: split is to put the GE results against Raytheon after a split. You can clearly see how GE will look. The comparison I have done and it is an eyeopener. It is awesome and very, very favorable to General Electric. heir capitalization is totally understated at $115 billion.
I also know Culp is an EXPERT in mergers and waiting his time. When he is good and ready in a year or two - he will add first smaller button hole acquisitions and eventually much large mergers. That is his trademark for growth and he is expert in doing that.
But what tires me out is the great group of idiots, hecklers, screamers, impolite people posting on this Board. So it is easier to just forget it all and patiently wait. Why don't they just sell the GE stock and short Tesla. They would make a lot more money buying Tesla Puts with a 12 month strike point rather than stay here at GE heckling for the next 6 months.
Eventually they will join Stephen Tusa (JPM) at predicting an illogical $5 a share. Eventually they will simply become silent because they are totally wrong, wrong, wrong. So was Tusa. Now he is silent. It is a shame that serious investors have to put up with these X-BOX posters. They are jst playing games....
Every few days GE announces awesome things. Very few days go by that some idiot writes a new story. These analyst compares Q1 2020 to Q1 2021 or goes back 3 years to obvious bad times to compare or writes some other idiot thing. It gets old....
from Gene (not "G to zero" or "Gregg" or "George" or any other posters starting with"G"
Below - you said (for the benefit of any other reader)...
hello gene there in washington state from omaha nebraska badly missing you opinions
For me the tender offer for buying back debt is another great decision to match his recent statement : "we will go after organic growth" and is he just trying to make work for GE ?
Your comments would be greatly appreciated
V
General Electric (GE) – GE shares gained 2.2% in the premarket after Morgan Stanley raised its price target on the stock to a Street-high of $17 per share from $13 a share, based in part on a possibly significant recovery in GE’s aviation segment.
R
GE is up 19% so far this year. To the 🚀and setting up there for quiet a while. Goldman increased the target to $15.00 after talking with investor relations. This is the closest thing to insider information I can think of. They said they felt solid on FCF being on the improved side over last year. The Pratt & Whitney failures will drive the service revenue for GE on their engines and push sales upwards.
T
General Electric announces cost-savings actions • GE voluntarily pre-funded $2.5 billion of estimated minimum ERISA GE Pension Plan funding requirements for 2021, 2022, and into 2023. • GE also repaid $1.5 billion of its intercompany loan to GE Capital. • These actions reduced GE''s pension deficit by $2.5 billion and reduced the intercompany balance, further simplifying GE. Including today''s announced actions and scheduled maturities in the fourth quarter, GE will reduce debt by approximately $14.5 billion in 2020-including $9.6 billion in GE Industrial debt and $4.9 billion in GE Capital debt-and by approximately $28 billion since the beginning of 2019.
(GE), (Trade)
S
Balance sheet problems continue to fade In another good sign for shareholders, General Electric is closer than ever to fixing its balance sheet for good. It ended last quarter with $63 billion of debt, offset by $25 billion of cash.
On Monday (Nov. 1), the company will close the sale of its GECAS aircraft leasing business to AerCap, generating immediate cash proceeds of at least $24 billion. Furthermore, GE still owns about $5 billion of Baker Hughes stock, which it is monetizing at a steady pace. This will enable GE to radically reduce its debt over the next year or so.
Additionally, the GE Capital unit completed its annual insurance review last quarter, finding that portfolio performance improved again relative to its established assumptions. This reduces the risk of any nasty surprises in the future (like the $6.2 billion after-tax earnings charge announced in early 2018).
As management completes its turnaround initiatives, supply chain constraints ease, and the aviation market recovers over the next few years, GE's earnings and cash flow are set to skyrocket. The combination of strong earnings momentum and reduced balance sheet risk could ignite the next rally in GE stock.
B
OH happy Day.. "General Electric (GE) (22%, 1.50%), the revitalized Aviation, Healthcare and Power conglomerate, was a top contributor following on its strong 4Q 2020 performance. Fourth-quarter Healthcare results were excellent, with revenues up 6% year-over-year (YoY), operating margins up 3% to 20% and strong FCF conversion. The Power and Renewables segment improved margins due to strength from gas plant services. With flight traffic increasing, Aviation appears likely to begin a multi-year recovery in the second half of this year. GE also swapped its aircraft leasing operations to AerCap for a 46% stake in the combined company, intelligently wrapping up its previously troubled GE Capital financing operations and further decreasing overall leverage. We continue to be impressed by the turnaround work of CEO Larry Culp, and the stock remains discounted against the quality of the three core business segments."
g
George
If you dig into the actual numbers - you will be amazed at how little General Electric gave up in getting to today's position.
The sale of biopharma was to give up a $3.4 billion sales volume producing 40% return or roughly a billion+ dollars profit contributing to the medical division. I was shocked Culp got at least 16 times earnings. I would never have done that deal....
All that volume and profit has been recovered since the Medical has grown back a lot of that volume and profit. More will be coming now that the pandemic is subsiding.
My take is the Biophama sale for $21 billion cash was way too much paid for it. And that division actually did not fit into the GE program.
If you look at the GECAS deal, it is simply another $21 billion cash bonus deal. GE still owns 44% of a double sized activity. Not much there to worry about. And lots of cash. It also was a genius sale in the form of merging two into one.... And GE can steer leases to AERCAP now and still profit.
If you look at the Baker deal, GE still has about 25% stock. But it is all assets to be cashed anytime they need more money. Culp did not sell anything to get this extras $7 billion remaining asset. It was an earlier Immelt deal.
If you look at the Wind turbines, GE spent about $1 billion developing the Haliade 13gw turbine over three years and all that depressed their bottom line. I was amazed they expensed the whole cost off at once, instead of spreading it out - which they were allowed to do.
Between the Cypress ONSHORE turbines and the Halaide OFFSHORE turbines - right now today they are dominant in both markets. They lead 2 years in a row on US Turbine sales. Siemens and Ventas both are promising thing in a few years. GE has them today and is selling turbines. Also GE has now got the World Bank approval for financing OFFSHORE Haliades.
Once again they sacrificed yesterday's profits for tomorrow bigger returns. If you play chess - this is a savy, very common move. Lose a few to get the big moves.
Looking at wind further, GE is racking up a lot of 20 years service contracts. I have heard on this board it is a poor return but I can tell you it is really a huge future profit center. It actually has a 20-25% margin return in the future and parallels the Aviation service contracts.
As far as Aviation, GE dominates 66% of the market and with an approved new 9X giant turbo engine that generates a whopping 135,000 thrust - GE is also is dominating that market. Their LEAP engine is unrivaled for reliability and sales are flying out the door.
Their future service contracts represent their next 10 years of large profits.
As for military, it is 17% of the GE Aviation sales and once again they are under long term service contracts that are stabilizing and lucrative.
As for Medical, they are solid as it gets and growing fast. They have just added some cancer detection and newer scanning items and there is no question in my mind they are doing incredible things in their labs.
Also, this is a focus area for Culp to get mergers because it most closely follows the Danaher product line. Very sophisticated products with breakthrough technologies.
As for power, it is a slow, steady slog but they are always in demand for replacement. Since they are in over 33% of all energy on this planet - they cannot be ignored. That includes hydro, storage, solar, nuclear and a lot more.... Once again they have developed newer energy low-emmision technology and that will be in demand.
As for dIgital, it is finally growing. It represents another $1 billion potential profit center. It took 6 years, but it has arrived.
As for GE Capital, it amazes me they can completely take it into the GE Industrial and pay down as much debt as they have. That shows any serious investor that they are now comfortable in their cash position. They do not need or really want a separate GE Capital any more.
Added to this is the reduction in overhead. In manufacturing the employee number is usually 5 employees per $1 million sales. In the case of GE that would mean a payroll of around 375,000 workers.
They have reduced that number to 170,000 employees which is closer to 2.2 people per million. That savings will drop to the bottom line.
Then there is the reduction of plants, excess overhead, consolidation of facilities, etc. That is also upcoming profit.
Then to add to this - they have eliminated factoring. This has to be a $1 billion improvement in the profit of the company.
I am a very careful investor. I do my homework.
George, You can think it is all bad. I think all the above and a lot we cannot see or know are rapidly coming up. I do not think Culp plans to spend this next 4 years without mergers, huge sales, breakthrough technology, and total market dominance.
Anyone who wants off the ship can leave anytime.
For me -I couldn't be happier with being on the boat.
gene
g
Take a very serious look at Larry Culp and Danaher
Most posters on this board know little about investing and even less on who is running GE.
Larry Culp was elevated to CEO of Danaher in 2003 when it was a very small $3 billion company.
Its claim to fame was mostly making craftsman tools for Sears and a few other things.
The stock was an $11 price in 2003 and profits were not that impressive.
Over the next 15 years Larry Culp has set the company on fire with:
a 2017 price of $181 a share (15 times bigger) that today in 2021 Danaher is now selling for $232 a share.
Danaher is now recognized and admired s a totally integrated worldwide conglomerate.
It has its hands into dozens of very sophisticated worldwide businesses.
From a few thousand employees in the early years, Danaher now has 71,000 very motivated employees.
The company has always had a profit which it plowed back into growing the company.
Culp's style is to keep headquarter small nd delegate to each division.
He traditionally works with only around 50 people at headquarters. He is a practitioner "lean and mean".
Over the years Culp has engineered at least 20 acquisitions successfully. All have turned out profitably....
He has also sold a number of divisions - each time profitably.
He developed special systems for motivating and getting the most from his employees.
That system was patterned after the Japanese work style.
It was so successful in steamlining the company, that EVERY acquisition turned profitable and successful.
After he left Danaher in 2015, he went on to teach at Harvard.
He ws one of the most sought after speakers and sought after classes on campus.
In 2018 he joined the GE Board. He was recruited to take GE to an entirely new plateau.
GE is 5 times larger than Danaher but it is the same puzzle - just bigger and far more complex.
There is no doubt where GE is headed. It is on a trajectory to soar.
For any serious INVESTOR wanting to make ten to fifteen times their investment over the next years - it is a brain dead decision to buy GE.
What is happening is obvious. GE is simply following the very successful Culp playbook.
g
Just coming over the Bloomberg terminal - part 2 Bloomberg just now being put on the web - part 2
“We really are in a position where we’re going to be able to play more offense,” Culp said.
Culp stressed that “playing offense” first means growing GE’s existing businesses that make jet engines, power equipment and imaging machines for hospitals
And debt reduction remains GE’s top priority for allocating its cash.
To wit, GE will to use proceeds from the AerCap deal to step up debt reduction since 2018 from roughly $49 billion today to $75 billion.
Yet Culp’s history at Danaher Corp., where he revamped the company with $28 billion worth of deals, suggests he’s unlikely to stop there.
He dazzled Wall Street with outsized returns and a steady cadence of deals to reshape the business from a dowdy maker of industrial products and Sears Craftsman tools to a health-care and life-science equipment and services provider.
He did it with a dispassionate view of the company’s holdings, telling an investor conference in 2010 that “no Danaher business has a permanent place in the portfolio.”
Culp has applied a similar philosophy at GE.
In one of his first moves as CEO, he cut GE’s prized dividend to a token penny a share.
Two years ago, he agreed to sell off GE’s bio-pharmaceutical business to his former employer for $21.4 billion, shelving an earlier plan to spin off the broader health-care division.
And in March, GE announced Culp’s largest deal to date: combining GE Capital Aviation Services with AerCap, parting with what’s been the jewel in GE Capital’s otherwise tarnished crown.
GE will erase GE Capital from its financial reports after that deal closes, and fold what’s left into its corporate balance sheet.
Among the remnants is the insurance unit carrying $37.7 billion in liabilities as of the end of September.
The business primarily backs long-term care policies that cover costs such as nursing home care and other cost associated with aging, which have been a big drain as Americans live longer and health care costs continue to rise.
The insurance portfolio has cast a long shadow over GE.
It prompted a $6.2 billion charge in 2018, plus another $15 billion over several years to cover a shortfall in reserves after years of deterioration with little warning to investors.
It also drew the attention of U.S. securities regulators in a probe of accounting issues at the company, which GE agreed to pay $200 million to settle last year.
Jettisoning the insurance unit would be a “momentous” step toward eliminating risks that have spooked some investors for years, said RBC Capital Markets analyst Deane Dray.
“It would’ve been euphoric a couple of years ago but it just wasn’t going to happen back then,” he said.
“It would remove another one of these nagging overhangs on the stock, if it were to be eliminated at a reasonable price.”
It would also achieve what Culp’s two most recent predecessors couldn’t: all but eliminating what remains of GE Capital, a big source of the company’s financial woes over the past decade.
Dray said GE could use some of the $24 billion in cash from the AerCap deal to attract a buyer for the insurance unit.
“If some new cash is coming in the door, what’s the best use of those proceeds?
At a minimum, it should be part of the dialogue,” he said.
Still, the once-volatile insurance operation has stabilized. It passed annual stress tests in each of the last two years and generated a tidy profit of $360 million in the first nine months of 2021.
That steadier performance, plus looming interest-rate hikes that may lift returns on the portfolio’s assets, could help GE secure a deal to part with the unit for good -- even if it has to pay someone to do it, said William Blair analyst Nick Heymann.
He said the likelihood of a divestiture will grow once the aircraft lessor sale closes.
“This is a boat that can float and everybody thinks it’s a concrete boat with no bottom,” he said in an interview.
Culp has long signaled his openness to a deal to unload the business, but he tempered expectations that will materialize soon.
“We don’t need to be in the long-term care business any longer,” Culp said.
“It’s a more attractive asset than it was, but in terms of the potential timing for a transaction, I can’t say, so I won’t.”
posted by gene part 2
M
GE Facts check: 1. profited $.03, better than expected. 2. revenue $17.1 billion. Lower than expected. Revenue is a kind disappointing. Except renewable energy having higher revenue than last year. All other business such as aviation, health care, power and capital all having lower revenue. No sure why healthcare have also disappointing results. 3. Cash flow: negative $860 million which better than last year. The outflow was mainly from aviation. 4. Outlook for 2021: profit $.15 to $.25 and cash flow to be positive between $2.5 to $4.5 billion. If aviation will recover better than expected, the earnings and cash flow will be at the high end side. 5. Discontinue to use Facting accounting next quarter.
GE is still in very early stage of recovery. What the management did was to make the company leaner and thinner and straightening accounting report. They did it. Can they grow the company? Nobody can answer the question. But one thing is clear and sure: GE is the market leader in each of its business sectors. Their business were affected by COVID-19. It will return to normal in near future. This will be sure thing. As the ceo said: “It is not if, it is when.”
Some investors are thinking GE will increase dividend and buy back stock. Don’t expect They will do this until 2023 when GE is fully recovered. Remember they just cut the cost and still have negative cash flow. There are a lot debt to be paid. As the management said, the debt will be cut to $40 billion by the year end of 2021.
With knowing these facts, it is important to set our expectation and don’t over hype as a shareholder or trader. Be patient and try to accumulate more shares when bears pushed it down such as this morning; i.e., lower the cost.
R
GE has been doing all the right things to provide a better business plan that includes strengthening the company for the future and to provide a solid escalating share price to retain and attract future share holders. I feel very positive about their 5 Year Plan.
g
Look At Hard Facts
AVIATION COMPETITORS ARE NOT STRONG
General Electric did not rush to the British Government and borrow $4.4 billion in a full panic like Rolls Royce had to do in March 2020. And they did not lay off thousands to avoid the payrolls. Without the British bailout, Rolls Royce would have folded.
GE did not have to merge with stronger Raytheon like Pratt Whitney did. Without the Raytheon strong balance sheet and the synergy both sides claimed – Pratt also would be in much tough shape today.
That is not to say that Pratt is now perceived as a great engine supplier. They build much less reliable engines compared to the GE LEAP engines.
LEAP is now the preferred choice on new Airbus and Boeing planes.
DEBT
At the same time in the past 18 months - GE was strong enough to pay down $70 billion debts. Ge Could easily have gone to the commercial bond market or drawn on their loan lines. They did neither. For the past 18 months GE did not increase debt or get rescued by anyone ….
General Electric did the smart thing. The biopharma deal was brilliant and all in GE’s favor. GE has shed assets like the GECAS merger- made at an incredibly smart deal.
RENEWABLES
At the same time GE took first place in 2019 and 2020 with the USA sales of ONSHORE wind turbines. In 2021 they are closing on the largest project at the Vineyard Farm in Massachusetts and the large New Jersey project - as well as a California project.
In 2021 General Electric took the dramatic lead supplying OFFSHORE wind turbines. Their 14GW Hallaides are being installed in the $5 billion sale to Dogger Bank.
Anyone looking at the 2nd and 3rd place competitors Vestes and Siemens in wind turbines can see they are far behind GE.
They are losing money, cutting back projections, losing sales, scrambling to get more efficient, struggling to catch GE in technology, and both have changed key managers. Both firms are in complete shock.
AVIATION NOW AND SOON Aviation is now running at 73% of pre covid. With the mandatory vaccine push on – it is probable the airlines will return to near normal in 2022.
There is plenty of pent up travel demand. Just look at the RV industry to see what pent up demand looks like. They are at record sales.
When AVIATION returns to normal, with Ge having made 66% of all jet engines on this planet - they will have more to do than they can do.
When Boeing and Airbus start delivering planes again, remember that GE is the major supplier and the price of any new plane includes 1/3rd of the overall price reserved to pay for GE jet engines.
MEDICAL
Culp has told us there is more demand than ever in shipping medical devices like MRI, ultra sound and monitor machines.
GE and all other suppliers simply are not able to supply all the orders due to supply chain issues. That should solve in early 2022.
OTHER POSITIVES.
I have reported on this Board at least 100 GE smart moves over the past 12 months.
The stock price has far more than doubled in that 18 months from a low of $5.48 in March 2020. The stock is now paused to allow earnings to catch up before the stock takes off again.
Stocks price are total reliable on greed and fear. Investors will want to see good profits before the buy higher priced GE.
By any measure during this pandemic, I think GE has been more nimble, more clever, more innovative, and is now taking advantage of all the reorganizing they can do today, preparing for tomorrow.
HECKLERS AND DETRACTORS
JJ , Perfect Market, Freddie, GE to Zero, and dozens of other ridiculous posters don’t like to see me post on the Board.
Tough
Let them show facts. Lets have new details backed by actual information. And forget their cutesies like telling me where they are going to lunch. Stop the bragging of how much they bought and sold. Forget what they imagine they made yesterday. And definitely I could care less how much liquor they can consume at noon.
Investors like me only want facts – just plain and verifiable facts.
When these numerous game players match facts with me – I welcome that challenge.
For now they are simply playing games on the General Electric Board.
Gene
g
Freddie
I also watched Culp yesterday at MS Laguna Conference.
You need to hear what he said.
Perhaps play it back 2 or 3 times.
Here is my take....
Culp has practiced LEAN manufacturing since 2003 and he taught it at Harvard.
It is an incredible tool and this year he finally has time to change 170,000 employees way to look at problems and opportunities.
You will see results next year after covid ends.
He reaffirmed his $3.5 to $5 billion FCF for 2021.
He said Aviation was down 29% but ONLY 29% and some markets were doing better.
He said half of all GE business income now comes from "services". That was new info to me.
He said Aviation return to normal will be the thing that you should watch for improved profits - possibly in 2023.
He was totally positive on Medical. The demand worldwide is very strong for new equipment, and it is held back by supply chain shortages in all companies, and also GE
H said GE touches 1 billion people with health items on the planet and that was amazing fact.
He sees more "bolt on" small mergers ahead now that the balance sheet is $70 billion debt reduced.
The focus now has shifted away from improving balance sheet to looking at every possible savings and opportunity.
He said they have moved away from centralized top down management and claims they actually have 30 distinct divisions - each making their own decisions. Obviously results will tell us if this works but if it does - look out for a lot more profits ahead.
He said despite covid and supply issues, he was still optimistic on 2021 results.
He claims all before was just a prelude to what us ahead. For example, in insurance the reserves held are now more than claims and some may return to their balance sheet.
He continues to praise his Board of Directors.
They are looking at increased dividends and potential merger candidates.
I cannot believe that all this and more was clearly stated and I came away fully understanding he is building a team this year as the company fights worldwide covid.
The team building and hundreds of LEAN saving ideas are so refreshing.
To ignore all if the above is simply to say "where are my dividends and why isn't the stock higher.
It will happen. but this is the prelude -not the actual event which will happen post covid in 2022.
Gene
d
A recovery in commercial aviation combined with margin improvement in power, renewable energy, and healthcare equipment sales is the recipe for success that GE investors will be hoping for 2021. Fortunately, GE is a company set to benefit from the coronavirus vaccine and investors have cause to believe significant progress on earnings and cash flow will take place.
For a company that has been around since the 1800s . From Renewable energy, Healthcare and Aviation GE is definitely a big player
g
General Electric Long Term Care Insurance
1976 American Express started the long term care insurance business. Years later it sold the portfolio to General Electric.
In 2004 GE sold the portfolio to Genworth Insurance, but was required to keep part of the riskier policies.
By 2018 The Kansas Dept of Insurance was the lead regulator. It’s job was to make sure GE had put adequate reserves aside to match upcoming claims. The insurance portfolio was around $56 billion.
In 2018 "whistleblower Harry Markopolos" released a “bombshell” accusation. He claimed GE was deficient $18.3 billion in the reserves.
GE denied this and Kansas regulators said the claim was false.
Steve Tusa – analyst – went orbital. He accused GE of fraud, overstatements, etc. The stock crashed from $30 to $12.
The GE board was furious. They did not know if the accusation had merit. They fired Immelt, then Flaherty, and brought in Larry Culp.
For the next 24 months insurance reserves and claims were murky and unclear to the public.
In 2020 the SEC gave GE a “Wells Notice”. The notice indicated an investigation was planned to see if there was deficiency. I watched the stock crater in minutes of the announcement from above $7 to $6.25. I bought at $6.25 a lot of GE and made a large profit as the stock rocketed back to $7 in a day or so.
Culp did a deal. He paid $200 million to the SECto settle – even though there was no wrongdoing.
REAL NUMBERS.
The actual insurance numbers shown in the Q1 2021 10q SEC report tell a lot more.
On page 26 the insurance liabilities in 2020 were $29,667 billion. In 2021 insurance liabilities were reduced to $29,204 billion.
They further clarified on Note 13 page 39. In that note it said in Q1 GE paid out $866 million in total insurance claims for the quarter. They had in reserves for long term care $16,997 in 2021 – up from $16,934 in 2020.,207 in 2020.
They also clarified that the life annuities (monthly payouts for lifetime) were $9.105 billion down from $9.207 billion in 2020.
It also is obvious that the size of those in the insurance is rapidly shrinking and will be done in just a few years. Finally it now has little to do with GE profits and reporting.
SO, WHERE ARE WE NOW?
GE has set aside way more money than it needs. It is in a secured government=controlled insurance reserve account. GE is finally overfunded and free of regulators, auditors, and government.
The insurance was hidden as part of GE Capital for years. With the elimination of GE CAPITAL – these numbers are now in clear view.
Culp is rapidly clearing off old GE issues and moving ahead to mergers, profits, growth…. Culp has said he would like to sell the insurance portfolio and it may now be possible.
TUSA IS ALL HOT AIR Steven Tusa does not know what he is talking about.
He says he holes GE will take the extra insurance payback from the EBITA on its statement. EBITA is interest, taxes, depreciation, appreciation. GE is free of this accounting.
Either they are getting back money from long-ago premiums paid by public. Or they are recovering reserves – money they already own. If the insurance money recovered is income – it is legitimate. If it is added capital – it has no tax consequence.
Whatever the case – TUSA does not know what he says is totally wrong. Even if GE had some sort of incoming money – it would be not that much so far.
CONCLUSION FOR SERIOUS INVESTORS
I hope all the above helps serious investors reading this Board. It is probably too technical for the “gamers on this board” AND Freddie who likes the messages to be limited to a paragraph and kept extremely “one thought” simple.
Me – I like to analyze and make my decision knowing all I can know.
Posted by Gene
D
I worked at GE for 20 years and left back in 1998 just before Jack Welch left. Welch was brutal and he did turn GE into a profit machine that kept delivering for years despite the toll on it's workforce. When Immelt took over, he ran the company into the ground especially with GE Capital. The new CEO is competent and has a track record of being a winner. I see GE slowly rising back with Culp. The products are still great and he is addressed the debt. GE stock should do well.
g
GE to equip 110 MW of Indian wind projects under deal with CleanMax
April 21 (Renewables Now) - GE Renewable Energy will supply 2.7-MW turbines for three wind projects in India with a combined capacity of 110 MW under a multi-year framework agreement with CleanMax Enviro Energy Solutions Pvt Ltd.
The renewable energy arm of General Electric (NYSE:GE) will deliver 42 units of its 2.7-132 hardware for “onshore wind hybrid” projects in Karnataka and Gujarat.
The new wind parks will meet the power consumption of various industrial companies, according to the announcement.
GE noted that product design for the particular turbine model takes place primarily at its technology centre in Bengaluru, blades are being made in Vadodara and Bengaluru, while assembly is done in Pune.
The new order comes with a 10-year full-service agreement.
B
My dad worked for GE for 30 years, passed away away at 97 last year. He was GE all the way...everything we owned was GE. He was part of the Greatest generation.....saved saved saved....talk about being long on GE! Gifted my sister, brother and I 300 shares each back in 2000. At that time stock had already split 3 times, and stood at $60 per share. I am patient and I know GE will continue to rise. Leadership and vision still great.
g
These figures were taken straight from the 10K just filed
1) receivable factoring is being reduced from 3.2 billion to to $400 million - savings will be 2.8 billion going to Free Cash Flow
2) General Electric has an unused asset of $7.3 billion ownership in Baker Hughes that is available to pay down debt. There are $1.3 billion non recurring charges last year now going to the GE bottom line.
3) pensions: every 1/4% (quarter point) upward inflation interest improves GE pension fund by 2.4 billion. GE is now vested at 81% in their pension fund which is above the 80% normal for industry standards. Since we see interest rates moving upward - every point would benefit GE $10 billion or about another 10% in their pension obligation. That is a real eye opener for improving value and reducing their debt.
employment and plant closings
Not mentioned in this story are the fact that GE has reduced their payroll 15% last year and reduced by 50% from 334,000 employees to about 170,000 employees. That 15% represented a savings of about $12 billion payroll plus taxes. also they closed a lot of US plants moving from about 140 manufacturing facilities in the US to bout 70 plans now.
T
I am confident there's a certain element of humor to shorties and day-traders on this board. Over the last few years, I've pushed back against Lying-Tusa who wanted to make money burying GE shareholders.. and with serious anger few times. I shouldn't laugh at his followers because when it comes to investments, it is very serious business for many people who may have invested more than they can afford to lose. That being said, it is funny to watch them, and the obvious inexperienced day-traders panic buy and panic sell for few cents on daily swings... Thanks for the volume people but no thanks.. and for those Tusa-Cult members, Your Tootsie is probably Sheltering-In-Place in the Caribbean's spending the money you are losing now. But obviously, we will eventually hear from him again, otherwise this would all be too easy. My final thought, outside of a rocket being set off, GE is absolutely set to hit approx. $25 next year and very likely close to $16 bucks by End of January. After that, the company is destined for incredible success under Culp. However, it will be a very different investment landscape that will include new Energy projects (EV Fast-Charging technology is for sure one of them), new Healthcare partnerships dealing with Pandemics, and much more !!! If you want to avoid vegas-style gambling on Stock-Du-Jour, You need to invest in GE, You will be rewarded !!
YOU ASKED WHERE I WAS THE LAST TWO WEEKS
I gave up on this board because it does not have serous posters - just kids playing around.
Dravos, you asked me for my take on General Electric and
Nothing could be clearer than these points below.
For the next 3 quarters the comparison to the same 2020 quarters (Q2,Q3,and Q4) will be so radically improved that the "experts" will tell us GE has finally recovered. It is true that they have improved a lot, but General Electric is going into the easiest quarters they have ever had to easily beat last year's results (pandemic) and GE results will look very strong.
As for the sideways stock price, It is obvious to me that we have to wait 8 weeks until the Q2 results are announced and then the stock will jump up. Until then - it is trading sideways in a tight range. It will do that for the next 40 days. Volume is light and will remain light.
The stock has added about 200 institutions owing it from about 1,650 to around 1,850 funds. That trend has been going on since Christmas and that is the most encouraging thing you can imaging.
Q3 and Q4 will blow us out with the increased results. I predict larger Free Cash Flow and much higher prices on the stock. I am sure that Culp has totally understated his expectations.
I get tired of posts on this Board by people lamenting that Culp is getting a large bonus that is only to be paid in three years IF HE DOES PERFORM. If he performs -I will benefit. And so will everyone else. So they should keep it buttoned up and say less about his deal - which is already signed, sealed, and will be delivered.
I am encourage on the fast recovery of Aviation. Today the TSA said last weekend flying was at least 90% of same weekend 2019. The whole resistance to flying is disappearing and by the New Year it will return to normal.
I am thrilled that GE has announced lots of breakout new large sales and many futuristic break through ideas and products. They have new products in all three areas (Aviation, Renewables, Health). Any serious investor has to just wait for a bit (like baking a cake), but the results are so clearly optimistic that any patient person will be rewarded handsomely in the next 12 months.
I Iike that GE is paying down of debt, reducing overhead (labor and plants), changing philosophy to the 150,000 employees still engaged, and total smashing of a terrible problem division at GE Capital which was a nightmare for any person to understand as they compare results.
The 8:1 Reverse split is too early for the GE Board to call. The Board is waiting to at least July when Q2 is in. Maybe even longer but it definitely will happen. People on the Yahoo Board just keep nagging about it, but the reverse split is something you will see mimicked in the next years by other firms as a real clever pricing tool. It is really a stoke of genius to get the stock right sized.
The best comparison on what General Electric will look like after the 8: split is to put the GE results against Raytheon after a split. You can clearly see how GE will look. The comparison I have done and it is an eyeopener. It is awesome and very, very favorable to General Electric. heir capitalization is totally understated at $115 billion.
I also know Culp is an EXPERT in mergers and waiting his time. When he is good and ready in a year or two - he will add first smaller button hole acquisitions and eventually much large mergers. That is his trademark for growth and he is expert in doing that.
But what tires me out is the great group of idiots, hecklers, screamers, impolite people posting on this Board. So it is easier to just forget it all and patiently wait. Why don't they just sell the GE stock and short Tesla. They would make a lot more money buying Tesla Puts with a 12 month strike point rather than stay here at GE heckling for the next 6 months.
Eventually they will join Stephen Tusa (JPM) at predicting an illogical $5 a share. Eventually they will simply become silent because they are totally wrong, wrong, wrong. So was Tusa. Now he is silent. It is a shame that serious investors have to put up with these X-BOX posters. They are jst playing games....
Every few days GE announces awesome things. Very few days go by that some idiot writes a new story. These analyst compares Q1 2020 to Q1 2021 or goes back 3 years to obvious bad times to compare or writes some other idiot thing. It gets old....
from Gene (not "G to zero" or "Gregg" or "George" or any other posters starting with"G"
Below - you said (for the benefit of any other reader)...
hello gene there in washington state from omaha nebraska
badly missing you opinions
For me the tender offer for buying back debt is another great decision to match his recent statement :
"we will go after organic growth" and is he just trying to make work for GE ?
Your comments would be greatly appreciated
• GE voluntarily pre-funded $2.5 billion of estimated minimum ERISA GE Pension Plan funding requirements for 2021, 2022, and into 2023.
• GE also repaid $1.5 billion of its intercompany loan to GE Capital.
• These actions reduced GE''s pension deficit by $2.5 billion and reduced the intercompany balance, further simplifying GE. Including today''s announced actions and scheduled maturities in the fourth quarter, GE will reduce debt by approximately $14.5 billion in 2020-including $9.6 billion in GE Industrial debt and $4.9 billion in GE Capital debt-and by approximately $28 billion since the beginning of 2019.
(GE), (Trade)
In another good sign for shareholders, General Electric is closer than ever to fixing its balance sheet for good. It ended last quarter with $63 billion of debt, offset by $25 billion of cash.
On Monday (Nov. 1), the company will close the sale of its GECAS aircraft leasing business to AerCap, generating immediate cash proceeds of at least $24 billion. Furthermore, GE still owns about $5 billion of Baker Hughes stock, which it is monetizing at a steady pace. This will enable GE to radically reduce its debt over the next year or so.
Additionally, the GE Capital unit completed its annual insurance review last quarter, finding that portfolio performance improved again relative to its established assumptions. This reduces the risk of any nasty surprises in the future (like the $6.2 billion after-tax earnings charge announced in early 2018).
As management completes its turnaround initiatives, supply chain constraints ease, and the aviation market recovers over the next few years, GE's earnings and cash flow are set to skyrocket. The combination of strong earnings momentum and reduced balance sheet risk could ignite the next rally in GE stock.
"General Electric (GE) (22%, 1.50%), the revitalized Aviation, Healthcare and Power conglomerate, was a top contributor following on its strong 4Q 2020 performance. Fourth-quarter Healthcare results were excellent, with revenues up 6% year-over-year (YoY), operating margins up 3% to 20% and strong FCF conversion. The Power and Renewables segment improved margins due to strength from gas plant services. With flight traffic increasing, Aviation appears likely to begin a multi-year recovery in the second half of this year. GE also swapped its aircraft leasing operations to AerCap for a 46% stake in the combined company, intelligently wrapping up its previously troubled GE Capital financing operations and further decreasing overall leverage. We continue to be impressed by the turnaround work of CEO Larry Culp, and the stock remains discounted against the quality of the three core business segments."
If you dig into the actual numbers - you will be amazed at how little General Electric gave up in getting to today's position.
The sale of biopharma was to give up a $3.4 billion sales volume producing 40% return or roughly a billion+ dollars profit contributing to the medical division.
I was shocked Culp got at least 16 times earnings.
I would never have done that deal....
All that volume and profit has been recovered
since the Medical has grown back a lot of that volume and profit.
More will be coming now that the pandemic is subsiding.
My take is the Biophama sale for $21 billion cash was way too much paid for it.
And that division actually did not fit into the GE program.
If you look at the GECAS deal, it is simply another $21 billion cash bonus deal.
GE still owns 44% of a double sized activity.
Not much there to worry about.
And lots of cash.
It also was a genius sale in the form of merging two into one....
And GE can steer leases to AERCAP now and still profit.
If you look at the Baker deal, GE still has about 25% stock.
But it is all assets to be cashed anytime they need more money.
Culp did not sell anything to get this extras $7 billion remaining asset.
It was an earlier Immelt deal.
If you look at the Wind turbines, GE spent about $1 billion
developing the Haliade 13gw turbine
over three years and all that depressed their bottom line.
I was amazed they expensed the whole cost off at once,
instead of spreading it out - which they were allowed to do.
Between the Cypress ONSHORE turbines and the Halaide OFFSHORE turbines -
right now today they are dominant in both markets.
They lead 2 years in a row on US Turbine sales.
Siemens and Ventas both are promising thing in a few years.
GE has them today and is selling turbines.
Also GE has now got the World Bank approval
for financing OFFSHORE Haliades.
Once again they sacrificed yesterday's profits for tomorrow bigger returns.
If you play chess - this is a savy, very common move.
Lose a few to get the big moves.
Looking at wind further, GE is racking up a lot of 20 years service contracts.
I have heard on this board it is a poor return
but I can tell you it is really a huge future profit center.
It actually has a 20-25% margin return in the future
and parallels the Aviation service contracts.
As far as Aviation, GE dominates 66% of the market
and with an approved new 9X giant turbo engine that generates a whopping 135,000 thrust -
GE is also is dominating that market.
Their LEAP engine is unrivaled for reliability and sales are flying out the door.
Their future service contracts represent their next 10 years of large profits.
As for military, it is 17% of the GE Aviation sales and
once again they are under long term service contracts that are stabilizing and lucrative.
As for Medical, they are solid as it gets and growing fast.
They have just added some cancer detection and newer scanning items
and there is no question in my mind they are doing incredible things in their labs.
Also, this is a focus area for Culp to get mergers
because it most closely follows the Danaher product line.
Very sophisticated products with breakthrough technologies.
As for power, it is a slow, steady slog but they are always in demand for replacement.
Since they are in over 33% of all energy on this planet - they cannot be ignored.
That includes hydro, storage, solar, nuclear and a lot more....
Once again they have developed newer energy low-emmision technology and that will be in demand.
As for dIgital, it is finally growing. It represents another $1 billion potential profit center.
It took 6 years, but it has arrived.
As for GE Capital, it amazes me they can completely take it into the GE Industrial
and pay down as much debt as they have.
That shows any serious investor that they are now comfortable in their cash position.
They do not need or really want a separate GE Capital any more.
Added to this is the reduction in overhead.
In manufacturing the employee number is usually 5 employees per $1 million sales.
In the case of GE that would mean a payroll of around 375,000 workers.
They have reduced that number to 170,000 employees which is closer to 2.2 people per million.
That savings will drop to the bottom line.
Then there is the reduction of plants, excess overhead, consolidation of facilities, etc.
That is also upcoming profit.
Then to add to this - they have eliminated factoring.
This has to be a $1 billion improvement in the profit of the company.
I am a very careful investor. I do my homework.
George, You can think it is all bad.
I think all the above and a lot we cannot see or know are rapidly coming up.
I do not think Culp plans to spend this next 4 years without mergers, huge sales, breakthrough technology, and total market dominance.
Anyone who wants off the ship can leave anytime.
For me -I couldn't be happier with being on the boat.
gene
Most posters on this board know little about investing and even less on who is running GE.
Larry Culp was elevated to CEO of Danaher in 2003 when it was a very small $3 billion company.
Its claim to fame was mostly making craftsman tools for Sears and a few other things.
The stock was an $11 price in 2003 and profits were not that impressive.
Over the next 15 years Larry Culp has set the company on fire with:
a 2017 price of $181 a share (15 times bigger) that today in 2021 Danaher is now selling for $232 a share.
Danaher is now recognized and admired s a totally integrated worldwide conglomerate.
It has its hands into dozens of very sophisticated worldwide businesses.
From a few thousand employees in the early years, Danaher now has 71,000 very motivated employees.
The company has always had a profit which it plowed back into growing the company.
Culp's style is to keep headquarter small nd delegate to each division.
He traditionally works with only around 50 people at headquarters.
He is a practitioner "lean and mean".
Over the years Culp has engineered at least 20 acquisitions successfully. All have turned out profitably....
He has also sold a number of divisions - each time profitably.
He developed special systems for motivating and getting the most from his employees.
That system was patterned after the Japanese work style.
It was so successful in steamlining the company, that EVERY acquisition turned profitable and successful.
After he left Danaher in 2015, he went on to teach at Harvard.
He ws one of the most sought after speakers and sought after classes on campus.
In 2018 he joined the GE Board. He was recruited to take GE to an entirely new plateau.
GE is 5 times larger than Danaher but it is the same puzzle - just bigger and far more complex.
There is no doubt where GE is headed. It is on a trajectory to soar.
For any serious INVESTOR wanting to make ten to fifteen times their investment over the next years - it is a brain dead decision to buy GE.
What is happening is obvious. GE is simply following the very successful Culp playbook.
Bloomberg just now being put on the web - part 2
“We really are in a position where we’re going to be able to play more offense,” Culp said.
Culp stressed that “playing offense” first means growing GE’s
existing businesses that make jet engines, power equipment and imaging machines for hospitals
And debt reduction remains GE’s top priority for allocating its cash.
To wit, GE will to use proceeds from the AerCap deal to step up debt reduction
since 2018 from roughly $49 billion today to $75 billion.
Yet Culp’s history at Danaher Corp., where he revamped the company with $28 billion worth of deals, suggests he’s unlikely to stop there.
He dazzled Wall Street with outsized returns and a steady cadence of deals
to reshape the business from a dowdy maker of industrial products
and Sears Craftsman tools to a health-care and life-science equipment and services provider.
He did it with a dispassionate view of the company’s holdings,
telling an investor conference in 2010 that “no Danaher business
has a permanent place in the portfolio.”
Culp has applied a similar philosophy at GE.
In one of his first moves as CEO, he cut GE’s prized dividend
to a token penny a share.
Two years ago, he agreed to sell off GE’s bio-pharmaceutical business
to his former employer for $21.4 billion, shelving an earlier plan
to spin off the broader health-care division.
And in March, GE announced Culp’s largest deal to date:
combining GE Capital Aviation Services with AerCap,
parting with what’s been
the jewel in GE Capital’s otherwise tarnished crown.
GE will erase GE Capital from its financial reports
after that deal closes, and fold what’s left into its corporate balance sheet.
Among the remnants is the insurance unit carrying $37.7 billion in liabilities as of the end of September.
The business primarily backs long-term care policies that cover costs
such as nursing home care and other cost associated with aging,
which have been a big drain as Americans live longer and health care costs continue to rise.
The insurance portfolio has cast a long shadow over GE.
It prompted a $6.2 billion charge in 2018, plus another $15 billion
over several years to cover a shortfall in reserves after years of deterioration
with little warning to investors.
It also drew the attention of U.S. securities regulators in a probe of
accounting issues at the company, which GE agreed to pay $200 million to settle last year.
Jettisoning the insurance unit would be a “momentous” step toward
eliminating risks that have spooked some investors for years, said
RBC Capital Markets analyst Deane Dray.
“It would’ve been euphoric a couple of years ago but it just wasn’t
going to happen back then,” he said.
“It would remove another one of these nagging overhangs on the stock,
if it were to be eliminated at a reasonable price.”
It would also achieve what Culp’s two most recent predecessors couldn’t: all but
eliminating what remains of GE Capital, a big source of the company’s
financial woes over the past decade.
Dray said GE could use some of the $24 billion in cash from the AerCap deal
to attract a buyer for the insurance unit.
“If some new cash is coming in the door, what’s the best use of those proceeds?
At a minimum, it should be part of the dialogue,” he said.
Still, the once-volatile insurance operation has stabilized. It passed
annual stress tests in each of the last two years and generated a
tidy profit of $360 million in the first nine months of 2021.
That steadier performance, plus looming interest-rate hikes that may
lift returns on the portfolio’s assets, could help GE secure a deal to
part with the unit for good -- even if it has to pay someone to do it,
said William Blair analyst Nick Heymann.
He said the likelihood of a divestiture will grow once the aircraft lessor sale closes.
“This is a boat that can float and everybody thinks it’s a concrete boat with no bottom,”
he said in an interview.
Culp has long signaled his openness to a deal to unload the business,
but he tempered expectations that will materialize soon.
“We don’t need to be in the long-term care business any longer,” Culp said.
“It’s a more attractive asset than it was, but in terms of the potential timing
for a transaction, I can’t say, so I won’t.”
posted by gene
part 2
1. profited $.03, better than expected.
2. revenue $17.1 billion. Lower than expected. Revenue is a kind disappointing. Except renewable energy having higher revenue than last year. All other business such as aviation, health care, power and capital all having lower revenue. No sure why healthcare have also disappointing results.
3. Cash flow: negative $860 million which better than last year. The outflow was mainly from aviation.
4. Outlook for 2021: profit $.15 to $.25 and cash flow to be positive between $2.5 to $4.5 billion. If aviation will recover better than expected, the earnings and cash flow will be at the high end side.
5. Discontinue to use Facting accounting next quarter.
GE is still in very early stage of recovery. What the management did was to make the company leaner and thinner and straightening accounting report. They did it. Can they grow the company? Nobody can answer the question. But one thing is clear and sure: GE is the market leader in each of its business sectors. Their business were affected by COVID-19. It will return to normal in near future. This will be sure thing. As the ceo said: “It is not if, it is when.”
Some investors are thinking GE will increase dividend and buy back stock. Don’t expect They will do this until 2023 when GE is fully recovered. Remember they just cut the cost and still have negative cash flow. There are a lot debt to be paid. As the management said, the debt will be cut to $40 billion by the year end of 2021.
With knowing these facts, it is important to set our expectation and don’t over hype as a shareholder or trader. Be patient and try to accumulate more shares when bears pushed it down such as this morning; i.e., lower the cost.
AVIATION COMPETITORS ARE NOT STRONG
General Electric did not rush to the British Government and borrow $4.4 billion in a full panic like Rolls Royce had to do in March 2020.
And they did not lay off thousands to avoid the payrolls.
Without the British bailout, Rolls Royce would have folded.
GE did not have to merge with stronger Raytheon like Pratt Whitney did.
Without the Raytheon strong balance sheet and the synergy both sides claimed – Pratt also would be in much tough shape today.
That is not to say that Pratt is now perceived as a great engine supplier. They build much less reliable engines compared to the GE LEAP engines.
LEAP is now the preferred choice on new Airbus and Boeing planes.
DEBT
At the same time in the past 18 months - GE was strong enough to pay down $70 billion debts.
Ge Could easily have gone to the commercial bond market or drawn on their loan lines.
They did neither.
For the past 18 months GE did not increase debt or get rescued by anyone ….
General Electric did the smart thing.
The biopharma deal was brilliant and all in GE’s favor.
GE has shed assets like the GECAS merger- made at an incredibly smart deal.
RENEWABLES
At the same time GE took first place in 2019 and 2020 with the USA sales of ONSHORE wind turbines.
In 2021 they are closing on the largest project at the Vineyard Farm in Massachusetts and the large New Jersey project - as well as a California project.
In 2021 General Electric took the dramatic lead supplying OFFSHORE wind turbines.
Their 14GW Hallaides are being installed in the $5 billion sale to Dogger Bank.
Anyone looking at the 2nd and 3rd place competitors Vestes and Siemens in wind turbines can see they are far behind GE.
They are losing money, cutting back projections, losing sales, scrambling to get more efficient, struggling to catch GE in technology, and both have changed key managers.
Both firms are in complete shock.
AVIATION NOW AND SOON
Aviation is now running at 73% of pre covid.
With the mandatory vaccine push on – it is probable the airlines will return to near normal in 2022.
There is plenty of pent up travel demand.
Just look at the RV industry to see what pent up demand looks like. They are at record sales.
When AVIATION returns to normal, with Ge having made 66% of all jet engines on this planet - they will have more to do than they can do.
When Boeing and Airbus start delivering planes again, remember that GE is the major supplier and the price of any new plane includes 1/3rd of the overall price reserved to pay for GE jet engines.
MEDICAL
Culp has told us there is more demand than ever in shipping medical devices like MRI, ultra sound and monitor machines.
GE and all other suppliers simply are not able to supply all the orders due to supply chain issues. That should solve in early 2022.
OTHER POSITIVES.
I have reported on this Board at least 100 GE smart moves over the past 12 months.
The stock price has far more than doubled in that 18 months from a low of $5.48 in March 2020.
The stock is now paused to allow earnings to catch up before the stock takes off again.
Stocks price are total reliable on greed and fear.
Investors will want to see good profits before the buy higher priced GE.
By any measure during this pandemic, I think GE has been more nimble, more clever, more innovative, and is now taking advantage of all the reorganizing they can do today, preparing for tomorrow.
HECKLERS AND DETRACTORS
JJ , Perfect Market, Freddie, GE to Zero, and dozens of other ridiculous posters don’t like to see me post on the Board.
Tough
Let them show facts. Lets have new details backed by actual information. And forget their cutesies like telling me where they are going to lunch. Stop the bragging of how much they bought and sold. Forget what they imagine they made yesterday. And definitely I could care less how much liquor they can consume at noon.
Investors like me only want facts – just plain and verifiable facts.
When these numerous game players match facts with me – I welcome that challenge.
For now they are simply playing games on the General Electric Board.
Gene
I also watched Culp yesterday at MS Laguna Conference.
You need to hear what he said.
Perhaps play it back 2 or 3 times.
Here is my take....
Culp has practiced LEAN manufacturing since 2003 and he taught it at Harvard.
It is an incredible tool and this year he finally has time to change 170,000 employees way to look at problems and opportunities.
You will see results next year after covid ends.
He reaffirmed his $3.5 to $5 billion FCF for 2021.
He said Aviation was down 29% but ONLY 29% and some markets were doing better.
He said half of all GE business income now comes from "services". That was new info to me.
He said Aviation return to normal will be the thing that you should watch for improved profits - possibly in 2023.
He was totally positive on Medical. The demand worldwide is very strong for new equipment, and it is held back by supply chain shortages in all companies, and also GE
H said GE touches 1 billion people with health items on the planet and that was amazing fact.
He sees more "bolt on" small mergers ahead now that the balance sheet is $70 billion debt reduced.
The focus now has shifted away from improving balance sheet to looking at every possible savings and opportunity.
He said they have moved away from centralized top down management and claims they actually have 30 distinct divisions - each making their own decisions.
Obviously results will tell us if this works but if it does - look out for a lot more profits ahead.
He said despite covid and supply issues, he was still optimistic on 2021 results.
He claims all before was just a prelude to what us ahead. For example, in insurance the reserves held are now more than claims and some may return to their balance sheet.
He continues to praise his Board of Directors.
They are looking at increased dividends and potential merger candidates.
I cannot believe that all this and more was clearly stated and I came away fully understanding he is building a team this year as the company fights worldwide covid.
The team building and hundreds of LEAN saving ideas are so refreshing.
To ignore all if the above is simply to say "where are my dividends and why isn't the stock higher.
It will happen. but this is the prelude -not the actual event which will happen post covid in 2022.
Gene
For a company that has been around since the 1800s . From Renewable energy, Healthcare and Aviation GE is definitely a big player
1976 American Express started the long term care insurance business.
Years later it sold the portfolio to General Electric.
In 2004 GE sold the portfolio to Genworth Insurance, but was required to keep part of the riskier policies.
By 2018 The Kansas Dept of Insurance was the lead regulator. It’s job was to make sure GE had put adequate reserves aside to match upcoming claims. The insurance portfolio was around $56 billion.
In 2018 "whistleblower Harry Markopolos" released a “bombshell” accusation. He claimed GE was deficient $18.3 billion in the reserves.
GE denied this and Kansas regulators said the claim was false.
Steve Tusa – analyst – went orbital. He accused GE of fraud, overstatements, etc.
The stock crashed from $30 to $12.
The GE board was furious. They did not know if the accusation had merit.
They fired Immelt, then Flaherty, and brought in Larry Culp.
For the next 24 months insurance reserves and claims were murky and unclear to the public.
In 2020 the SEC gave GE a “Wells Notice”. The notice indicated an investigation was planned to see if there was deficiency. I watched the stock crater in minutes of the announcement from above $7 to $6.25. I bought at $6.25 a lot of GE and made a large profit as the stock rocketed back to $7 in a day or so.
Culp did a deal. He paid $200 million to the SECto settle – even though there was no wrongdoing.
REAL NUMBERS.
The actual insurance numbers shown in the Q1 2021 10q SEC report tell a lot more.
On page 26 the insurance liabilities in 2020 were $29,667 billion. In 2021 insurance liabilities were reduced to $29,204 billion.
They further clarified on Note 13 page 39. In that note it said in Q1 GE paid out $866 million in total insurance claims for the quarter. They had in reserves for long term care $16,997 in 2021 – up from $16,934 in 2020.,207 in 2020.
They also clarified that the life annuities (monthly payouts for lifetime) were $9.105 billion down from $9.207 billion in 2020.
It also is obvious that the size of those in the insurance is rapidly shrinking and will be done in just a few years. Finally it now has little to do with GE profits and reporting.
SO, WHERE ARE WE NOW?
GE has set aside way more money than it needs. It is in a secured government=controlled insurance reserve account. GE is finally overfunded and free of regulators, auditors, and government.
The insurance was hidden as part of GE Capital for years.
With the elimination of GE CAPITAL – these numbers are now in clear view.
Culp is rapidly clearing off old GE issues and moving ahead to mergers, profits, growth….
Culp has said he would like to sell the insurance portfolio and it may now be possible.
TUSA IS ALL HOT AIR
Steven Tusa does not know what he is talking about.
He says he holes GE will take the extra insurance payback from the EBITA on its statement.
EBITA is interest, taxes, depreciation, appreciation.
GE is free of this accounting.
Either they are getting back money from long-ago premiums paid by public.
Or they are recovering reserves – money they already own.
If the insurance money recovered is income – it is legitimate.
If it is added capital – it has no tax consequence.
Whatever the case – TUSA does not know what he says is totally wrong.
Even if GE had some sort of incoming money – it would be not that much so far.
CONCLUSION FOR SERIOUS INVESTORS
I hope all the above helps serious investors reading this Board.
It is probably too technical for the “gamers on this board”
AND
Freddie who likes the messages to be limited to a paragraph and kept extremely “one thought” simple.
Me – I like to analyze and make my decision knowing all I can know.
Posted by
Gene
April 21 (Renewables Now) - GE Renewable Energy will supply 2.7-MW turbines for three wind projects in India
with a combined capacity of 110 MW under a multi-year framework agreement with CleanMax Enviro Energy Solutions Pvt Ltd.
The renewable energy arm of General Electric (NYSE:GE) will deliver 42 units of its 2.7-132 hardware for “onshore wind hybrid” projects in Karnataka and Gujarat.
The new wind parks will meet the power consumption of various industrial companies, according to the announcement.
GE noted that product design for the particular turbine model takes place primarily at its technology centre in Bengaluru, blades are being made in Vadodara and Bengaluru, while assembly is done in Pune.
The new order comes with a 10-year full-service agreement.
1) receivable factoring is being reduced from 3.2 billion to to $400 million - savings will be 2.8 billion going to Free Cash Flow
2) General Electric has an unused asset of $7.3 billion ownership in Baker Hughes that is available to pay down debt. There are $1.3 billion non recurring charges last year now going to the GE bottom line.
3) pensions: every 1/4% (quarter point) upward inflation interest improves GE pension fund by 2.4 billion. GE is now vested at 81% in their pension fund which is above the 80% normal for industry standards. Since we see interest rates moving upward - every point would benefit GE $10 billion or about another 10% in their pension obligation. That is a real eye opener for improving value and reducing their debt.
employment and plant closings
Not mentioned in this story are the fact that GE has reduced their payroll 15% last year and reduced by 50% from 334,000 employees to about 170,000 employees. That 15% represented a savings of about $12 billion payroll plus taxes. also they closed a lot of US plants moving from about 140 manufacturing facilities in the US to bout 70 plans now.