Posted on 06/26/2018 12:39:26 PM PDT by SeekAndFind
GE on path to reduce debt by $25 billion
GE's turnaround strategy is becoming clear.
The company announced plans on Tuesday to spin off its health-care unit and separate its stake in oil services company Baker Hughes over the next two to three years. GE will focus its operations on the aviation, power and renewable energy businesses.
“Today marks an important milestone in GE’s history. We are aggressively driving forward as an aviation, power and renewable energy company — three highly complementary businesses poised for future growth. We will continue to improve our operations and balance sheet as we make GE simpler and stronger,” CEO John Flannery said in a statement. “We are confident that positioning GE Healthcare and BHGE outside of GE’s current structure is best not only for GE and its owners, but also for these businesses, which will strengthen their market-leading positions and enhance their ability to invest for the future, while carrying the spirit of GE forward.”
GE said it will maintain its current quarterly dividend until it spins off its health-care unit. The company will then adjust the dividend “in line with industrial peers.”
Flannery later said on an investor call the company will likely lower its "aggregate" dividend once the health-care spinoff is finished.
GE shares rose 7.4 percent in early trading Tuesday, tracking to its best day since April 10, 2015. Its stock is down 27 percent this year through Monday and has declined by 54 percent over the past year.
The company also plans to reduce its net debt by about $25 billion by 2020 and generate $500 million or more in corporate cost savings by the end of 2020.
(Excerpt) Read more at cnbc.com ...
GE will be a focused high-tech industrial company that will be easier for investors to follow and measure with a significantly improved balance sheet to support its remaining businesses:
And in a year GE Health will be no more...most likely file for bankruptcy now that the Feds don’t have to pay them for any loses.
HAHA Another one takes in the Arse for suckling to Obama and his Socialist wet dream.
GE is a wounded publicly traded company with big debts and huge pension obligations. It is currently selling at a historic low of ~$13.50/share but still has annual total sales exceeding $100 billion and some profitable sub divisions. When wounded giants are bleeding in the water they attract investment banker sharks and their bloodless acquisition, merger and liquidation specialists. IMHO GE is a takeover target whether its management is willing or not. Suspect the sum of its parts minus liabilities exceeds $30/share. Any Freeper thoughts?
Or they can go back to making crappy clock radios...
RE: Suspect the sum of its parts minus liabilities exceeds $30/share. Any Freeper thoughts?
GE was trading at $36/share two years ago. A year later, they dropped to $18/share and this year, they dropped even further to as low as $12/share.
If you believe that they can recover ( like Alcoa did after they got kicked out of the Dow ), then even if they are worth less than $30/share ( say, $20/share), it’s still worth the risk at the price they are trading at right now.
Remember Citigroup? This company went from trading at over $60/share before the mortgage crisis, to an almost bankrupting $2/share. They had to be rescued by Uncle Sam and for many years, they were only trading at less than $4.00/share. Then, they did a reverse 10 to 1 split and traded at $45/share or something close to that price.
Today, they are trading at over $65/share once again. If you bought them at $2/share during the most pessimistic time, you would have tripled your money (taking into account the 10 to 1 reverse split ). But then, you would have to wait for a decade to reach that price.
I think with GE, one has to be REALLY PATIENT similarly.
How does every major company always have so much debt? Are there not any big ones that run their business without always borrowing money? GE shows profit margins of around 10% for the past 12 years... How does that turn into millions of dollars of debt?
GE Healthcare produces medical devices. I’d hate to see that group go bankrupt.
Yeah you know the renewable energy market has a vast history of total winners in it.
GE was at $50 a share back in the late 90’s, under Jack Welch. The jackwagon Immeldt he put in charge did a lot of this but did get back up to $36 as you say, just before the great recession. And then despite all the handouts and Immeldt sucking up to Obama, “windmills”, etc, the company never recovered. Despite selling off NBC and other big chunks.
GE does have some very good and solid fundamental businesses, and with this spin out those will become more prominent. The problem with big conglomerates is there are too many mouths to feed (businesses competing for capital and M&A investment) and not enough of them that are actually capable of moving the needle quarter after quarter.
GE Healthcare isn’t going to go tits up. Their MRI/CT/PET-Nucmed business is in the top 3 with Siemens/Philps. Toshiba and Hitachi and a bunch of also rans make up only a small percent of the market. The service side alone for the installed base is massive and is where the majority of profits come from. Then there is the financing provided to the hospitals.
Patient monitoring that used to be Marquette Medical is still a significant business.
Then there are the lower cost X-ray, bone density, etc equipments.
The Genetic/biological side is the only side that I’m not as sure about - the massive Amersham acquisition back around 2008-2010 was never fully integrated with the tech side of the business and could be a spin off on it’s own with it’s DNA sequencers and such.
Biggest issue they had while I was there was a lack of regulatory understanding that bit them hard between 2005 and 2010.
I have bought into it in the last 6 months. They got down to about $9 during the big 2007/2008 fiasco. I’m of the opinion that the hard businesses were devalued by the financial plays that Capital took on. The sell offs I think took care of the majority but not all of that. The remainder and the failure to focus on cost controls is what has taken the more recent toll.
I’m not sure I’d go up to $35, but I definitely think the hard assets are worth more than the $13-14 they are currently at.
“GE Healthcare produces medical devices. I’d hate to see that group go bankrupt.”
i seriously doubt GE healthcare would go bankrupt ... they make big, expensive diagnostic machines of all sorts found i hospitals and clinics everywhere, and they may be the GE division best positioned to excel in standalone mode ...
i totally fail to see the synergy of aviation and renewable energy ... unless, that is, they plan to fly solar panels and windmills behind airplanes ...
See post #3
Ge has become a shell of the iconic company it once was, thanks to Immelt.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.