DawgTalkers.net Forums DawgTalk Palus Politicus General Electric seeks urgent asset sales as bond fears rise

NEW YORK (Reuters) - General Electric Co (GE.N) will sell assets with "urgency" to reduce its high debt, Chief Executive Officer Larry Culp said on Monday, as GE shares tumbled as much as 10 percent and the cost of insuring its debt hit a six-year high.

Culp is facing tough questions about GE's financial strength and profit outlook after being named CEO on Oct. 1 with a mandate to turn around the 126-year-old conglomerate.

"We have no higher priority right now than bringing leverage levels down," Culp told CNBC. "We have plenty of opportunity to do that through asset sales."

Culp said GE also was trying to get "a better grounding in reality" in its ailing power unit.

Last month, GE posted a quarterly loss of $22.8 billion (17.74 billion pounds), cut its annual dividend to just 4 cents a share and told investors it was facing a deepening federal accounting probe. The power unit lost $631 million in the quarter and GE wrote down $22 billion in goodwill because expected future profits in the unit now appear unlikely.

Since then, some analysts have questioned GE's liquidity and slashed their target prices for the stock. Culp said he thought the power business was "getting close" to bottoming out after more than a year of declining revenue and profit.

Some GE bonds are now trading far below par, and its five-year credit default swap rose to a bid price of 176.5 basis points and the upfront price (GE5YUSAX=MG) (GE5YUSAX=R) to 3.4 percent on Monday, according to data from IHS Markit and Refinitiv.

The spike in credit default swap costs comes as short positions in GE debt have risen to $958 million from $238 million in December 2017. The most shorted debt security is the 5 percent perpetual bond <369604BQ5=>, which has no maturity date, and has seen short positions more than double to $442 million from mid-September. Analysts at Credit Suisse and CFRA cut price their stock targets prices on Monday from $12 to $10 and $9, respectively, citing uncertainly about GE's earnings and margins, and potential liabilities and writedowns at its insurance and power units. JPMorgan analyst Stephen Tusa last week cut his target to $6 from $10.

"We do not think the stock 'works' until confidence is restored," Credit Suisse analyst John Walsh wrote on Monday.

GE shares closed down 6.9 percent at $7.99 on the New York Stock Exchange after falling as low as $7.72.

GE had $114 billion in debt at the end of the third quarter, 3.7 times its equity and more than four times the industry average debt-to-equity ratio of 0.77, Refinitiv data shows. High debt levels can increase a company's risk of default.

Former GE CEO John Flannery announced $20 billion in planned asset sales a year ago, but many are either still in the works or have not yielded enough cash to bring debt in line with peers.

GE's largest deal so far, merging its railroad locomotive unit with Wabtec Corp (WAB.N), netted just $2.9 billion in proceeds and 9.9 percent of the combined company.

Culp said GE was considering potential deals involving its "crown jewel" aviation unit, which shares technology with power, but such moves were not a high priority.

"We wouldn't say 'no' for all time to various options," but breaking the unit out, monetizing it or raising equity were "not high on our list" of strategic moves, Culp said.

https://finance.yahoo.com/news/general-electric-seeks-urgent-asset-002254918.html

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So let me get this straight. A company that alresdy paid zero in taxes, got another tax cut, is somehow drowning MORE in debt?

Lemme guess, conservatives. The only way to save this company is to deregulate and cut more taxes, right? Lolololololololol

Jeff Immelt ran GE into the ground and if anyone can save it, it will be Larry Culp.

I think there should be an investigation of Immelt.

I also think I should inform you that there are no taxes on Losses!

Failed corporation. I know you’re sad inside.

Hopefully the government doesn’t save them.

Why would I be sad?
Just bought some today for the first time.

biggest con is corporations convincing the masses that taxes are why they arent succeeding. the more you research, the less its about taxes and more about mismanagement.

GE CEO admits regular investors have fled the stock since he cut the dividend to a penny

https://www.yahoo.com/finance/news/ge-ceo-admits-regular-investors-173400788.html

GE CEO Larry Culp acknowledged Monday that his decision to slash the quarterly dividend to a penny sent regular investors scrambling.
About one-third of GE shares are held by retail investors, a higher than average mix for a public company.
GE's dividend cut, the second in a year, came as a dramatic move by Culp to free up cash for the beleaguered company.
General Electric GE CEO Larry Culp acknowledged Monday that his decision to slash the quarterly dividend to a penny sent regular investors scrambling.

"When we announced on our earnings conference call that we were taking our dividend down to 4 cents a year, we didn't do anything positive for our retail shareholder base and they have been exiting the stock, I think, as a result," Culp told CNBC's David Faber on " Squawk on the Street ."

But even with the stock's slide over the past several weeks, Culp says GE "would make those same decisions today, because those were the right decision to make sure the company is facing forward." GE shares have fallen about 20 percent in November, on pace for its worst month of trading since February 2009.

About one-third of GE shares are held by retail investors , a higher than average mix for a public company.

GE's dividend cut, the second in a year, came as a dramatic move by Culp to free up cash for the beleaguered company. Once treasured by shareholders for its payout, GE expects to retain about $3.9 billion in cash a year as a result of the cut. GE has struggled to turn its falling stock as the company is weighed down by its weak power business and its heavily indebted GE Capital portfolio .

Beyond retail investors, Culp said GE stock's recent fall also came from a flight of institutional investors. Culp said the decision to remove the company's full-year profit forecast from its most recent earnings report was "another unpopular decision but one that was straightforward."

"We didn't have the confidence and conviction that we would want, particularly around our power business, as we looked toward the end of the year. That didn't do much for our institutional holders," Culp said.

"The stock has been under pressure" during the last two weeks, Culp added, "no doubt about that."

So far, since I bought, GE stock is up over 2 percent.

Try getting 2 percent per day from your bank!

Wasn't Immelt Obama's boy and left hand man on business advisory? I think so.

Up over 3% now. Actually just dipped under 3% as I typed this post! Problem is the stock has lost 60% of its value in the last 5 years. If you wanna day trade speculate that's fine, there's money to be made playing at that frequency level. If you want to actually invest in a company long term? GE looks horribly managed. I do think cutting dividends makes sense as many companies no longer give them out, so why play the dinosaur game? But that's not the only part of the equation giving them bad optics.

Shhhhhhhhh.

You will be hounded and chastised for saying such things.

What? Sorry, I was counting my profits while you poo poo'ed GE and Larry Culp.

Swish, I will try to explain the problem with your thinking.

High taxes are a significant, unnecessary problem for ALL companies.

Some, even many, companies have bad management or make a few bad decisions, or just get unlucky.

Not ALL companies suffer from these problems, but those that do, are affected more by high taxes, or any other major expense, for that matter.

Companies that make no profit, pay no taxes.

Just because ONE, or several, companies lose money, pay no taxes, and are poorly managed, has nothing, absolutely NOTHING, whatsoever to do with a high corporate tax structure doing damage to businesses and the economy as a whole.

They are two completely separate and unrelated concepts.

the problem with your thinking is that you honestly believe that multi billion dollar profiting corporations somehow can't invest into the country due to taxes.

we will never agree on this. ever.

i mean seriously. the same CEO's who mismanage the companies they are running aren't tell the masses they are tanking because of mismanagement, but that its the taxes and regulations that are holding them back.

and whats worse? the sheep believe it. every. single. time.

Are you tired of winning yet?

It’s also interesting that regardless of how poorly a company is doing they manage to continue high CEO wages, and pay out management bonuses too.

The school where you learned business management? Request a refund.

I never said anything at all about profitable companies not being able to invest inside the US because of high taxes. First, GE has not been such a profitable company for a while now. Second, US investment was not at all under discussion. Which is why I did not reference it.

High taxes for such investment are ONE factor, among many, as to why SOME companies invest SOME in foreign countries and not ALL inside the US. Sales locations, transportation issues, skilled or unskilled labor availability, stability of government, population, currency, policies on resources, land ownership, are a few of the many, many others. Ford sells cars in Europe, which has significantly different vehicle regulations than the US. It makes good business sense to build the cars they sell in Europe, which match European regulations, in, guess where, Europe. Just because they did not open a European car factory in your back yard does not mean they are determined to screw you over.

The percentage of CEO's who badly mismanage corporations is fairly small, of course they will point a finger at anyone but themselves. However, CEO's of just about ALL companies will complain about high taxes, because they are a significant revenue loss, and often are counter-productive.

You seem all too eager to believe whatever propaganda you are fed. You have stated you believed incorrect propaganda in the past, although the mechanism by which that occurred is unclear. Corrective measures for such problems usually involve obtaining more, accurate, information. Not just blindly repeating a party line because it makes you feel good.

Nothing you have posted suggests that GE, specifically, the company being discussed, has blamed their specific, current, individual problem on taxes being too high. Likely this is at least in part because, last year, they paid no taxes because they made no profit.

Not just yet.

GE up 5 percent!

boy oh boy. somebody hasn't been paying attention.

i laughed reading this entire post, and then it peaked with this:



this isn't the first time we've discussed GE on this board. which is surprising, since you seem to remember all the other stuff i post, but not that part.

odd. but here:

“From a GE perspective, at a minimum, we need to have a corporate tax system where the rate of taxation is commensurate with the OECD average of 21 or 22 percent,” down from 35 percent, GE Chief Financial Officer Jeff Bornstein told Reuters, referring to the Organization for Economic Cooperation and Development. “We at least need to be on a par.”

GE looks for sharp cut in corporate tax rate under Trump

https://www.reuters.com/article/us-ge-re...p-idUSKBN1541FP

GE has stated many times they wanted lower tax cuts for multiple reasons. google is your friend, Nelson. unfortunately we all know you don't like using it. but use your brain and you'll see all the information is there if you just look. i'm tired of going around in circles with you. seriously, its stupid. I didn't make anything up, those are the facts. its not my problem that you fail to acknowledge the facts.

lololol. anyway, i'm already done talking to you for the rest of today. you're not interested in having a discussion. you just constantly come here to lecture people. i'm sure 40 will entertain you for the day. i will not. have a good one.

Is English your primary language?

They said they don't like taxes. I said they ALL don't like taxes. There is no disagreement here.

YOU said they blamed their failures of mismanagement on high taxes. Nothing like that is in the statement. This is where the disagreement is.

Maybe some one will break it down to Dick and Jane level for you.

Its like listening to a god speak.

GE up 11 percent.

Sold half.

IMO, he failed to read carefully, and also failed to understand what all the words mean. There are other possibilities.

They definitely do not say what he thinks they say.

You speak logically while puny humans listen emotionally.

j/c

Corporations have never paid their stated tax rate. After deductions and loop holes the effective corporate tax rate in America (rate actually paid) is between 17% and 18%. Everything else is just BS and noise.

which is why i point out how full of it large corporations are when it comes to taxes.

GE has been complaining about their tax rate for a while now. which again is odd since they keep getting losses and have a tax rate of 0.

so why does a corporation with a tax rate of 0 want the taxes lower?

why is a corporation that is struggling not ending bonuses and still continues to pay their executes crazy amounts of money? i mean the guy they just fired is still gonna receive around 21 mill a year, for the next 4 years.

its like when pence/trump bribed Carrier with tax cuts....and then carrier decided to bolt anyway, and STILL got cuts.

and yet half the country will still argue in favor of these kinds of businesses, despite the fact that they will do everything imaginable to screw them over, as long as they make a profit.

Pit, that is just flat out wrong.

You are speaking of ALL corporations, aggregated together, as a group. This is NOT TRUE for each and every individual corporation.

If you want to generalize, and stereotype, and believe that what is true, on average, is true in each individual case, then your beliefs are flawed.

We are speaking of ONE, INDIVIDUAL corporation.

It's just like Amazon saying they were going to move their corporate HQ's so American towns everywhere jumps through hoops to give them the largest tax breaks so they'll move there.

Corporate welfare.

Corporations are people...

GE does NOT have a tax rate of 0, which should be expressed as 0%. They paid an AMOUNT of taxes of 0, which should be expressed as $0.

The REASON they paid $0, is because they did not make any money. Taxes are paid on profit. No profit, No taxes.

They also, at no point in any of what you posted, blamed their poor performance on high taxes. They simply stated they want lower taxes, just like everyone who earns a living and pays taxes.

You are failing to understand the simple printed words that you yourself posted. They do not say what you claim they say.

They may have made such a claim in some other statement which you have not posted. You stated they made such a claim, in the statement you posted. This was not true. That is not what those words YOU POSTED actually mean.

You are demonstrating a heavy prejudice against corporations. You are making unsubstantiated claims based on an emotional response coupled with hatred. They are not true.

Well I certainly found a new friend in GE today.

If stating a fact, like how much GE stock has dipped in the last 5 years, is poo poo'ing, then guilty as charged. I did not say anything bad about Larry Culp as I don't know the guy. I want GE to do well as I have friends who work there, so it's not me wishing them harm in any sort of way.

Hogwash.

The Honda plant that went to Marysville was considering my home town. I was very aware of the details of what was offered, and the financial calculations involved. The benefits of bringing 3,000 jobs to my city were extensive.

The specific tax cut was to offer a piece of property, which the city owned, because the previous owner had defaulted on the property taxes, at a value well below market, for a piece of property which had absolutely ZERO interested buyers. There were deals to put in additional roads, forgo the property taxes (which the city was not receiving anyway) for a period of several years, and a few other minor considerations.

NO ONE, absolutely NO ONE, in my home town who was able to do simple math and not just spout socialistic slogans, had any kind of objection whatsoever to the offer, the discussion centered on what ELSE we could throw in to the deal.

The city would make a buck on selling the land because they got it cheap. They would save money not having to mow the lawn. The additional roads were mostly paid by the state, the city outlay was very minimal, income taxes alone made it a good deal in a very short period of time, plus the increased taxes from all those 3,000 new workers spending their wages at other local businesses.

There is a difference between GIVING MONEY AWAY and simply TAKING LESS.

You give one example and expect people to believe that's what happens everywhere? Give me a break. And what did the location who actually got the plant deal give them?

Try this one on for size.......

A move to Long Island City could allow Amazon to reap nearly $1B in city tax breaks

https://www.6sqft.com/a-move-to-long-isl...ity-tax-breaks/

I gave one example to illustrate that it does not happen ALL the time.

You and Swish have the same problem. You see something happen SOME of the time, and somehow believe it happens ALL of the time. It does not. Now, when you post articles you apparently can't read, that makes this problem worse. Or if you take an average and confuse yourself that every example is exactly average.

Almost all the examples of "Corporate Welfare" are in the form of taxes deferred, or forgone, there is no or very little gift of cash, it is in taking less away. As in my hometown example, the income realized from city income taxes from the new employees, more than made the difference, not to mention follow-on benefits. Like taxes paid by people who made more money because they did business with the new employees.

25,000 employees making 30,000 per year is 750,000,000, almost the entire tax savings, that will be partly spent in and around the community, deposited in local banks, etc, houses and apartments bought and rented, etc., etc. A City tax of .5% would yield 3 million, seven hundred and 50 thousand dollars in tax revenue, EVERY YEAR, direct income to the city. The city taxes, that AMAZON will not pay, are revenues that the city DOES NOT GET, if Amazon does not relocate there. Along with all the other listed revenue that the city does not get.

I do not know the details of what Marysville offered to Honda. I do know what Marysville looked like, before, and after. Huge upgrade. I also know what my hometowm looked like, after. I left shortly after this, as most of the downtown businesses had closed their doors, due to not enough job providers remaining in the area.

In case you do not know, these large corporations, are job providers. They write the paychecks that much of the population depends on, directly, and another large chunk depends on, indirectly.

Some cities, just like some companies, are run by idiots that cannot do simple math, understand plain english, or just get flat-out unlucky, and make bad deals. That certainly happens. But, to first assume that money, which would not be owed at all if the company does not come, which is forgone by the city, constitutes some sort of instant cash "gift", and then fail to take into account the benefits, on many levels, of adding a large number of new paychecks to the community, is just pure ignorance and reliance on simplistic slogans and prejudice and bigotry.

Fat fish, skinny fish, fresh fish, rotten fish... still all fish.

Why thank you ever so much for that tremendously useful tidbit of information.

Did you graduate from the same school Swish goes to?

Also, some, but not all, of your examples are healthy and nutritious to consume, and some, but not all, are not.

They are all, amazingly enough, fish, you did get that correct.

Making generalizations regarding things like corporate welfare is commonplace. However you endeavor to change that to suit your agenda, whatever that is, is moot when it is accepted to be commonplace.

I agree with your acertations to the degree that no two corporations are exactly the same. But not unlike lemmings the corporate herd mentality can be generalized and most will end up over the cliff, while a few do the obviously right thing and live to see another day.

It is not commonplace nor accepted as such. Generalizations are not correct when dealing with specific examples.

Now, it would be an assertation, if I had made it, but what you describe, is not what I said.

I stated that taking an average and applying it to all corporations is incorrect.

I stated that just because one company does a particular act, does not mean that all companies do that same act.

I did not, at any time, state, or imply, nor assert any concept whatsoever that could be remotely construed as saying that no two corporations are exactly alike. That would require a degree of oversimplification worthy of an elementary school mind.