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  • Can Disney's Valuation Support A Sustained Move Past $100?  [View article]
    Rode the stock from roughly $89 to $102.25 this morning where I sold 3/4 position to lock down 15% gain into cash for redeployment. Waiting for a pullback to the 95 range to add back. The company has solid prospects going forward, but this has been one heck of a run not to think there will be some profit taking or a sector rotate away from consumer-driven names IF oil moves higher and the pump price follows-- granted, still a lot of spare pocket money being provided even at $60-70 Brent, but one has to remember the typical Wall Street reaction.

    The chart showing the correlation to the 200 averages is a good guide for how the stock trades, but I don't know how long it will take for it make a large enough move to re-confirm this correlation. A 5-7% pullback from the roughly $103 high today is much more common in this market, especially heading into Spring when Europe/Debt fears begin to fester once again.
    Feb 6, 2015. 05:37 PM | Likes Like |Link to Comment
  • Practicing Patience With General Electric  [View article]
    Anyone have an idea of what is included in the $2 billion of dispositions they list for the 2015 cash flow? Is this largely the appliances deal or something else that is in the works?
    Feb 6, 2015. 04:50 PM | 1 Like Like |Link to Comment
  • Update: General Electric Wants To Sell Its White (Elephant) Goods Business  [View article]
    I have to agree with Wizard with the rotation going on. GE scrambles to assigned "core" status to whatever is hot at the moment. Capital got this marker and look where that stands now. I had a feeling something was coming, though, given the layout of the last 10Q presentation with significant space allotted to Oil and Gas, Aviation, Power and Water, and Capital, and then you have Home and Transport given half pages. And now Home is selling off appliances and Transport is selling off rail signalling as per the Alstom transaction.

    Services and Industrial internet are hot right now and slowly moving toward semi-core status to replace the shrinking of Capital.

    Hard to stomach from a "company pride" standpoint, but I'm pretty sure it makes sense from an investor standpoint. Shore up the margins and stop bleeding cash on a company that would need to spend heavily to take on the top two competitors, AND spend heavily to fend off lower position/cheaper competitors from Asia.

    They need to get this horse back in the race though. They are leading the pack when it comes to Aviation and Power, but we need to get some more business that does not have a 3-4 year gap between order and payment. Racking up LEAP and GEnx engines are great, but the planes won't be built or delivered until 2017/18 or later. At least divisions like Appliances provided steady cash flow for the company to deploy elsewhere. We need better cashflow operations that will allow them to continue acquiring companies, buying back stock at a feverish pace (and actually retiring the shares instead of carrying them against equity), and paying down debt on the industrial side of the balance sheet.
    Jul 17, 2014. 12:13 PM | 3 Likes Like |Link to Comment
  • General Electric Has Bigger Fish To Fry  [View article]
    David-- trying to make the point that at $17 billion versus a market cap of $245 billion, Alstom is small potatoes is misleading. Alstom adds nothing to GE Capital, but GE Capital adds much to that $245 billion market capitalization. You need to strip out the impact of Capital on the market capitalization in order to perform a proper comparison. Alstom aims to contribute to GE Industrial operations-- what portion of EPS comes from industrial and how will that portion be increased by the Alstom deal?

    Further, GE is not using the Finance IPO to meet its $4billion divestiture goal. The $4 billion in divestitures are for industrial units only. They have already sold the Wayne fuel dispenser business to this end and have also announced a sale to Triumph Group of some aerospace operations.

    Alstom provides them more than what is on the Alstom books since the current operations have no exposure to GE services platforms. If GE buys Alstom, they buy their installed base. They can then start selling monitoring devices to gather and track data for efficient operations, and then use that data to design Advanced Pathways technologies to improve operations and efficiency, which can then open the door to even more advanced services contracts.

    The deal is such that Alstom is equal to "X" and GE can provide a multiplier to that amount by designing and selling additional products and services for the current base, plus future sales. You need to determine how great the multiplier will be so that, after the deal and the R&D and the sales are made, you no longer have simply "X" but perhaps 1.5X or 2X or greater. Alstom sold the base and services--- GE can further monetized that base with additional product offerings.

    GE is already coming up with ways to double back through existing wind farms to "remonitize" the assets-- they have developed a way to put larger and lighter blades on older turbines to increase power output by capturing more and slower speed winds through longer blades that have more leverage. They will bring these technologies to the fleets they are buying with Alstom.

    Granted, the deal comes with new complexities for a behemoth company that requires a 20 square foot wall to fully diagram existing operations, but it will nonetheless prove profitable and add to the free cash flow which can be used for further acquisitions or share buybacks (which I would love to see-- they need to bring the float down to the 8 billion range to really put some snap back into the supply/demand equation for this company).
    May 28, 2014. 11:53 AM | 3 Likes Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    You don't need plants outside the US to have an international footprint. I think their jet engine and current exports of turbines and locomotives can attest to that fact.
    May 23, 2014. 10:17 AM | 1 Like Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    Excellent observation-- but GE also has a lot of installed capacity around the world that is aging. So it definitely increases the base, but not the type of risk.
    May 22, 2014. 10:49 AM | Likes Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    Immelt confirmed their approach and ability to close the deal. Also reaffirmed the business plans to divest $4 billion in industrial units this year. The Wayne sale should have gotten them a little bit of cash (valued $500-600 million, but GE likely only got $50-100 for it's stake in the unit). What else would be on the chopping block? I know people have clamored for them to get rid of lighting and even appliances. But these are providing "some" cash. Lately GE has been excluding appliances, lighting, and transportation from full coverage in the quarterly presentations, lumping the three together in one slide. Each has quarter revenue of $1-1.5 billion, so it could be parts of these or one outright. Any thoughts?
    May 21, 2014. 05:14 PM | Likes Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    Head to head, but two of dozens of manufacturers. Not likely a strong objection there.
    May 21, 2014. 05:11 PM | Likes Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    Old Wizard- agreed. They would garner a lot better PR with the public if they announced repatriating that cash, paying the tax to make up for their previous "tax evasions", and deploying the proceeds into buying American companies that will support American infrastructure and exports. They are already well adapted to exporting equipment from this country. With either plan there will be blowback from investors and analysts. Buy a faltering company with a lot of work needed to turn it around, or repatriate and get hit with taxes-- the stock will take a hit with either announcement. But in the process GE will look better and will make more money.

    Granted, I will not be selling my shares if this deal closes or fails. GE has enough gears finally being used to support a decent 3-5 year and beyond trajectory. Nothing much in the next few quarters or even the next year or two but that yield. Things will slowly begin to compound however and that will lead to higher EPS (especially through increased buybacks). Alstom is bitter icing on the cake-- it will add profit, but a whole new wave of headaches and hoops to jump through.
    May 21, 2014. 01:29 PM | 1 Like Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    They made a much better deal buying AVIO where at least they get to skim cash off the success of their competitors through selling them parts for their engines and hardware-- win/win. With Alstom the benefit comes through coal to cleaner coal/ coal to gas retrofits. This is a services play the entire way through. Buy their way into a larger installed base of equipment to design monitoring and maintenance services for after they perform the upgrades to the existing fleet. This is overwhelmingly apparent considering they are more than willing to dump their wind portfolio despite the fact that GE has nearly zero competitive products in the offshore market, and their willingness to dump the hydro business to other investors despite that being a potentially high growth area for Asia/Africa moving forward and retrofitting existing infrastructure with new and more powerful turbines to increase operational efficiencies and outputs without the costs of new dams being constructed.

    If Siemens lacks the ability to provide services through the industrial internet, they are buying this for the hardware only as a block to GE and an attempt to bolster their growth. Obviously their plans thus far are not working considering that GE has an enterprise value roughly 4-5 times larger than Siemens. This move has greater merit by allowing Siemens to "rescue" this failing company and tie up both their futures in the European doldrums. Meanwhile, GE can continue to build out brand new heavy gas combined cycle plants throughout the world.

    GE should fold their hand and use that $17 billion to quickly snatch up fast growing small/mid-cap names in the oil and gas and energy production industries, or put that cash to use buying up more wind farms in the GE Energy Financial Services portfolio which is quickly becoming a significant contributor to EPS (they have roughly $.02 annual additional to EPS but are growing nicely and will continue to increase their contribution). I would much rather have a steady payment flow coming into the coffers from Megawatthours demand than from credit cards and real estate sales. Invest in small/mid-size business loans and hard physical assets that produce steady, reliable, and relatively predictable cash flows that can be amassed and redeployed continually.
    May 21, 2014. 01:21 PM | 2 Likes Like |Link to Comment
  • General Electric Must Prepare To Lose Alstom To Siemens  [View article]
    Let's just step back a moment and turn this on it's head. Would it be terrible to see Siemens give up its train business to a company having a hard time booking orders, and to then spend cash on a business that it also having a hard time booking orders? Let Siemens take on the headache of integrating these new businesses and dealing with sluggish orders, headcount integration problems and a testy French government. While they are busy working all of this together, GE can then pick off 3rd and 4th tier companies while SI is out of action.

    Perhaps the plan all along was to get Siemens muddled in a problematic takeout to hurt their business from the inside versus straight forward competition?

    Likely grasping at straws here, but now that we have seen what the French are planning for their businesses, I think it would be smart move to step back from this bluff and let Siemens keep their hands dirty with the new situation and take it all down.
    May 21, 2014. 11:23 AM | 15 Likes Like |Link to Comment
  • General Electric: Buying Into Europe's Recovery  [View article]
    The story is now shifting to GE buying only the Energy business of Alstom. This would be a better fit for them as it would add capacity in the field to bring under the Services roof in the future-- as well as Advanced Gas Path sales. I don't think they should mess around with the TGV segment-- too much risk in financing not coming through for those infrastructure projects and they are pretty much one and down ventures. Whereas power plants and turbines are constantly being planned, built, serviced, and upgraded around the world.
    Apr 24, 2014. 05:38 PM | 2 Likes Like |Link to Comment
  • The End Of The Correction-Less Fantasy Land  [View article]
    If you are so sure that the S&P is going to continue moving lower, why would you waste time on LTL and FXA instead of buying out of the money SPY puts (let's say the June '14 $180 strikes for $4 and change)? If you are betting on the market heading to a 10-20% pullback/correction in a fairly short period of time, it would seem more cost effective to buy puts, no? You can go long at full price and hope your thesis pans out. Or you can use much less cash and bet fully against the index. Less money at risk while seeing leveraged returns through the options exposure. If your goal is trim exposure by selling 10% if the S&P closes below a certain level, I would assume you would not want to roll right back in at full price.
    Apr 11, 2014. 04:54 PM | Likes Like |Link to Comment
  • General Electric: Increasing Backlogs Is Just One Side Of The Story  [View article]
    I should expect the services backlog to make a big jump in the next few years as the recent orders for turbines, locomotives, and jet engines begin entering the global fleet. They need to expand into as many areas as possible where they have a chance to make large-scale equipment and infrastructure that become long-lived assets in customer fleets. That is the only way they will be able to effectively displace the cash flow they are losing with the Capital downsize.

    Build and sell the product- make money.

    Service the product over the life of the product-- make more money.

    Offer services and solutions to help extend the life and efficiency of the product== make even more money.

    They are selling the razor to get the future razor blade sales... and then they offering services and solutions to get the blades to stay sharp longer.


    The other growing icing on the cake are the equity positions they have in energy projects tucked away in Capital within the energy financial divisions. As they slowly add to the portfolio there (among other infrastructure areas) they are further padding cash flow.

    A terribly large number of moving parts, but they sync nicely along identifiable lines.
    Mar 26, 2014. 05:04 PM | 3 Likes Like |Link to Comment
  • Why Jacobs Engineering Will Probably Beat The Market  [View article]
    Early Retiree-- completely agree. Also, they are relatively under the radar compared to their peers Fluor and CB&I which helps to keep the momentum guys and traders out of the ranks. One point of caution though-- the growth of sales in Europe has some explanation in their acquisitions versus organic growth. I would have liked to see both work in their favor up to now, but if Europe ever makes the turn out of recession, they should do well on their legacy businesses as well as catch the rising tide on their newer businesses.

    Good hunting.
    Mar 8, 2014. 01:52 PM | Likes Like |Link to Comment