Will GE Stock Deliver the Goods? I Doubt It Because General Electric is Still a "BFC"
General Electric is an American icon. But for several years, it's been an American disappointment. Much of the blame goes to the ineffective leadership of soon-to-be former CEO Jeffrey Immelt. The other problem, though, is a confusing business structure. As I argued previously for InvestorPlace, in its bid to become everything, GE hardly did anything.
My fellow IP colleague, Chris Tyler, disagrees. In his front page report for Yahoo Finance, he states that we should not lose focus of what GE has done right. Tyler notes the following:
General Electric beat top- and bottom-line forecasts. The company did announce full-year views slightly above the midpoint of consensus estimates. GE is generating sufficient cash to sustain its dividend, which some had questioned in recent months. And that management reset up top? Already a much leaner and focused conglomerate thanks in large part to Immelt’s vision, the CEO slot is being filled by John Flannery, General Electric’s former head of healthcare and a person with a reputation for executing.
I agree that GE is putting in a strong effort to turn the company around. But despite its asset divestitures, General Electric is what I would call a BFC: Big, Fu...err...riendly, Company.
On July 6, I wrote the following:
I credit InvestorPlace writer Tom Taulli for simply calling General Electric stock for what it is: an overly complicated investment. Taulli rightly mentioned that it’s difficult to track the financial performance of GE. He writes that the industry giant “is a sprawling global organization, with businesses in far-flung categories like energy, renewables, additives, lighting, aviation, power systems, healthcare, transportation and even the Internet of Things.”
Taulli also pointed out that management often victimizes GE stock with a penchant for bad decisions. For example, General Electric divested Synchrony Financial (NYSE:SYF), which later went on to strong gains. And the oil and gas business was just classic GE, and not in a good way.
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Haha I like that "Big F***ing Company." They have way too much debt for me. But then again they are the only stock on the Dow from the original list way back then, and they are involved in tons of businesses from light bulbs to high performance engines. I guess a company their size is allowed to have a massive amount of debt, but that's still just too much of a red flag for me.
Built an empire...maybe too much empire building.
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