General Electric- Wooly Mammoth or Hidden Gem?

November 1, 2017

 

 

Is General Electric the Wooly Mamoth in the room... or the way forward on the horizon? 

 

General Electric has seen a brutal response since its earnings report came out for Q3 2017. 

 

After losing 13% over the last week with a correction not seen since the financial crisis it is leaving many investors worried about the cut in dividends that will surely be coming their way. 

 

With analysts jumping on the ‘sell’ rating wagon there could be a further correction ahead. But all is not lost, with the stock now at a 5 year low and changes already ringing out from the new DEO John Flannery things could at least be turning the right direction. 

 

John Flannery took over from Jeff Immelt after serving the role for 16 years, although he had the misfortune of steering the company through the financial crisis it is now evident that corporate squandering of profits along with placing a lot of the eggs in the basket of GE’s financial services only to see them crack under the pressure of the overall down turn of the economy. 

 

Since Flannery has taken the reins there has been quite a shake up in the over-all future and cost effectiveness of GE, some of the measures he’s put in place so far to hit the $2 billion he wants to cut in annual costs are; 

 

Cancelling the annual retreat for executives in Florida. 

Selling off the corporate fleet of jets (including the spare empty one that Immelt had follow him around just in case his had problems).  

Getting rid of around 650 executives company cars. 

 

This is also to show that the wasteful nature of GE will not be tolerated. 

 

The boardroom has also seen some changes with the CFO Jeffery Bornstein stepping down. 

 

Also on the hit list is around $20 billion worth of companies he plans to sell off in the next 2 years. 

 

GE are holding the investor meeting on the 13th of November, and if the future that is laid out is a bright one and the plans can be pulled of we may start the long road back to a brighter future. 

 

John Flannery has been in GE for 30 years, and is the former head of GE Healthcare and it is said that the sector of GE that has been most innovative is Healthcare. He has also said that he wants to use the same ethos he used in the healthcare sector in a broader scope for the whole of GE. 

 

Flannery is also well respected with in and outside General Electric and has other members of the board backing him up to get him into the position publicly before he got the position. 

 

The markets like a clean cut picture to know what they are dealing with, and I for one will be keeping a close eye on them for the future.  

 

 

*At this point in time I am not holding any positions in GE, however I do have orders set up to go LONG, correct at time of publishing. 

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