Written by Nathaniel E. Baker, Seeking Alpha Editor and contributor.
Editors' Note - this was published just before news broke that GE was replacing John Flannery as Chairman and CEO with Lawrence Culp. GE also announced a $23B impairment charge to GE Power.
General Electric's (NYSE:GE) stock has dramatically underperformed the broader market the last two years, plunging 60% while the S&P 500 has gained 35%. There are several reasons for its malaise. The company has been beset by accounting problems, its flagship power segment has struggled, and poor investment decisions have caused debt loads to pile up. And that's just for a start. Some analysts have started to question if CEO John Flannery is the right person for the job, with a few calling for his removal.
With shares at a nine-year low, Seeking Alpha authors are debating (sometimes quite passionately) the company's merits as an investment. Below is a synopsis of six recent Seeking Alpha articles, split evenly between three bullish arguments and three bearish ones. Who's right? Only time will tell. The articles below certainly make convincing arguments for either case. Read on, and have your say in the comments below.
Even the bulls say the opportunity is not quite right to buy yet, and speak to certain structural problems in the business. On the flip side, bears are not willing to say all is lost yet, with many acknowledging there could be an entry point for bargain hunters before too long. Neither side is particularly (or at all) fond of current management.
Nor are Seeking Alpha readers. "The once 'best in class management' has turned into the gang that couldn't shoot straight," said vince 111. "I've lost all confidence in management and the board." "The new managerial team lacks communication skills," said billrla. "Enough with the charts and the finance-speak. Talk to investors plainly and talk about GE and its products, not about management's latest efforts to sell-off 'non-core assets'."
Still, it seems the right type of divestiture - of parts of GE Capital specifically, as that unit holds most of the company's debt - would be cheered by the market. A positive earnings report could also be a catalyst for a rally in shares. The next quarterly earnings announcement is Oct. 25. Set your calendars.
What are your views on this stock? Which articles have you found most helpful? Post your thoughts below.
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Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.