Anybody thinks that the latest news that GE might break up into three parts is the beginning of the end we've all been expecting for a while now?
This pretty much seems like a desperate move to me, and if it happens, I don't believe things will improve, quite the opposite.
I guess we'll know soon enough...
Breaking up GE is the best solution for solving the current problem. There are 2 ways to divid the company, by regions (GE EU, GE China, GE India...) or by businesses. It is good for everyone, shareowners, most of employees and customers.
It makes financial sense. Breaking up is good for most of the employees as well. Power, Aviation, O&G and healthcare equipment are the leader(#1 or 2) in its own industry. GE is no longer the # one company in the world. The breakups can be the king in its own industry. It is always good to the king.
They can't afford the cost to break up the company. The only way to get out of this mess is to grow out of it, not cost cut out of it. Dump the idea of that monstrosity called GE Digital which has spent billions and billions of real dollars trying to convince people GE is a software company, while claiming billions and billions of cost out...(It's a mirage at best) Corporate should set standards and let the businesses implement them individually. If you want to create more cash, earn it. Don't try and find it by cutting over and over again. Rebuild Commercial Finance from the ground up, continue to enable the Industrial businesses by financing their deals, and create growth instead of trying to continuously rob Peter to pay Paul.
It all depends on who is in charge as to what the company will look like. A financial type has no interest in making parts and having a lot of people on payroll. It's like the Berkshire Hathaway model. A small group of people in an office far away looking at the numbers and making deals, trying to amass cash. If things start to look not so good, package a sale. When I started at GE a long time ago smaller focused factories working independently and less buracrocy was all the rage of the genius in charge. Maybe GE is circling back around.
"Sum of the parts" analysis has come up with a share price of $11-$15. The real question is whether the liabilities are worth more than $11-$15/share.... not $17.
"I believe bankruptcy is the only possibility to shed the pension and other liabilities."
Yep.
So now it's up to JF to figure out what GE is really, really worth. If it's work anything near $17 a share then there will be tough times but GE as a business will exist in some way. If it's not, if JF finds too many uncounted liabilities, then bankruptcy will be the way to go.
My guess is that the biggest liability is the pension and that Wall Street has properly calculated that into the stock price. In other words, with what we know and we know the pension problem, $17 a share is about right and GE will survive.
It doesn't look good for GE's 600,000 current and future pensioners. I don't see how a breakup would help, either. Immelt & the Board let GE associates down.
http://money.cnn.com/2018/01/18/investing/ge-pension-immelt-breakup/index.html
All hands please report to the p--p deck!
Abandon ship! Save yourselves!
The liabilities are too large. I believe bankruptcy is the only possibility to shed the pension and other liabilities. Post-bankruptcy, perhaps a few separate business divisions could survive.
An after thought; a take over would work well. The hourly would be retained and the first ones to go are management.
Not sure of the pros and cons of the whole matter. I would think that if it happened they would be able to have a bunch of charge offs, or deductions, helping to clear up a multitude of Immelts sins. The draw back maybe that each individual company would now be subject to the possibility of a take over. The thought of selling off the three main segments creates a problem as in they are too big for anyone to buy, but broken up, the actual value would be corrected to the market. An example is Aviation; Curtis Wright has been buying GE stock, they can't do a take over of the whole company as it stands now, but could acquire Aviation as a stand alone entity, and then pare it down to recoup take over capital expenditures. An actual market value for each segment would be difficult to ascertain due to the fuzzy math GE has been using for decades. Just the thoughts of a dumb--s hourly....what do we know.
Not sure of the pros and cons of the whole matter. I would think that if it happened they would be able to have a bunch of charge offs, or deductions, helping to clear up a multitude of Immelts sins. The draw back maybe that each individual company would now be subject to the possibility of a take over. The thought of selling off the three main segments creates a problem as in they are too big for anyone to buy, but broken up, the actual value would be corrected to the market. An example is Aviation; Curtis Wright has been buying GE stock, they can do a take over of the whole company as it stands now, but could acquire Aviation as a stand alone entity, and then pare it down to recoup take over capital expenditures. An actual market value for each segment would be difficult to ascertain due to the fuzzy math GE has been using for decades. Just the thoughts of a dumb--s hourly....what do we know.
Any idea what tomorrow's all hands with JM and RK is about? Any "BIG" announcements expected?