GENERAL ELECTRIC DIVIDEND UNSAFE SHAREHOLDERS BEING PLAYED AGAIN SELL TIME
Special UPDATE: Get something straight. Our view is corporations are suppose to be honest, profit centered, frugal, intelligent, productive, hungry entities not lazy extension of the welfare office. General Electric Stock: TIME TO SELL. GE has grown to be a fat sloppy useless Bureaucracy that has a big gut but no stomach to compete. From what I can gather by the headquarter’s parking lot, most don’t bother to come to work on Fridays. It is the Teldar Paper Corporation on steroids when it comes to perks and poor performance. GE offers life time employment so it is chock full of dead weight RIPS. RIP means RETIRED IN PLACE. Decision making processes are constipated from the top of the alimentary canal to the bottom. GENERAL ELECTRIC DIVIDEND UNSAFE SHAREHOLDERS BEING PLAYED AGAIN SELL TIME.
NEW CEO is product of the OLD TAINTED GE CULTURE:
Don’t worry, you won’t get a straight answer from this guy or the Board.
Will you look at that freak’in tie and those fly away collars! Who dresses this guy? What’s he go’in to his own hanging? That’s not a tie, its a noose. Classic Truck Driver knot. Its not even a Half Windsor. Bet he will be a big hit at his High School Reunion. He looks like a server in the lunch line. “Care for some more Tuna Noodle Casserole?”
The Dividend is not SAFE. This guy ALREADY DOESN’T GET IT. WE NOW HAVE A SELL RATING ON GE. BUFFETT SOLD OFF ALL HIS GE IN AUGUST 2017. PAY ATTENTION!
I will tell you what you can expect and to some degree it is already happening. Trust me I have ZERO communications with GE’s moronic management, neither does Cramer. They ignore everyone in the market media from Barrons to CNBC as if we have never seen this double talk before. We have seen it and we can smell bad news. Undoubtedly Buffett could smell if too unless it was the Tuna Casserole talking.
The Late John Fiedler actor could have played Flannery in how to succeed at GE without really trying… same fly away collars and necktie noose.
The New CEO is a guy named John Flannery.
He is a product from within which by itself makes him suspect. Think about it. In a Bureaucracy what kind of guy floats up? The Yes Man Bureaucrat and the one that doesn’t rock any boats and is never perceived as a threat to his superiors or their spheres of influence. He has never worked outside of GE where he has been a more or less bean counter since the beginning.
He was involved in Alstom SA’s power grid business. Because of GE’s scale the French Government was constantly meddling and refining the deal and eventually taking a stake in it. Of course it was corrupt. In fact years later the Alstom would be convicted by the DOJ of Bribery. What can you say, its a typical stinky French firm. GE was not involved in that side of it but overpaid substantially for the power grid.
Finally Flannery did a stint with GE Healthcare. Since medical imaging has moved to China lock stock an barrel including R&D, I assume he had something to do with that decision.
GE shareholder don’t need another politician.
Every GE decision is political now. Every notion of cutting heads becomes a mutiny aboard the Good Ship Lollipop. In simple terms it is a diversity nightmare in which the factions who could care less about shareholders are in full cancerous control of the company. This is all the more reason to split this egregious nightmare apart.
So what has Flannery done so far to improve GE’s steady decline of business operations?
The most nothing as possible of course. He took away GE Executive’s private cars. He then took away their private jets. This is all symbolic and doesn’t help the bottom line. How many cars are involved? 10? In fact it is worse than symbolic. It is a form of political “class” punishment in which the essentially useless management has to look like they are suffering before some low level ministerial type can be let go. It’s a game. It’s Teldar Paper and Mr. Cromwell Flannery just took away the season’s hunting lodge passes. Why should any shareholders be celebrating this show of nothing? That is not what Shares want to hear. They want to hear how GE can be falling behind so far in a Global Economy which is the best in 10 years. GE is dysfunctional.
GE has 300,000 employees and a culture of political correctness and the diversity monster at every turn.
It is now an organization based on hyper-sensitivity where everyone’s input even the most inept MUST be respected and treated like golden tablets from heaven. In the old days of GE if this went on, those clowns would be escorted out the front door and into the parking lot with the contents of their desk in a paper box. But that was back when GE wasn’t some kind of extension of the welfare office. They created this giant mess and now shareholders, THE OWNERS, have had enough thank you very much. The Employees values no longer match the objectives of the Shareholders. Employees and Management are bilking the shareholders at every turn.
There is absolutely no reason whatsoever that GE should have race and gender sensitivity training. What is this a High School?
We would much rather see quality control, inventory management training installed and perhaps Chinese language skills. This is a business not some hippie life fulfillment Woodstock styled EST training experience. Shareholders want a sense of urgency not this complacent malaise.
Vertical institutions don’t work. That is the definition of a Bureaucracy like the Post Office or government employment.
What motivates most of the massive GE workforce? RETIREMENT!
Sad to say many of the massive layers of GE management hang on year after year only to retire. We have a name for that… RETIRED IN PLACE or RIP! That is what these people live for. They want that fabulous 1970’s style Retirement! RIPs have retirement brochures in the desks. They are willing to destroy the company to get it.
The only operations that have this kind of mindset these days are these big bloated failing corporations and the US Postal Service. I am sure one or two people have had great ideas over time but I am also certain their ideas were quashed by some middle manager that was the rock of Gibraltar against change and innovation. How else would they have risen in the GE Top Down management structure? Add in diversity and you add in another layer of incompetence and politics. Women managers are completely risk adverse as are minorities that fear the ax more than death in a brain vacuum.
Nerd Engineers have no place at GE: In fact HR occupied by the Diversity Wing doesn’t want to hire them. So they don’t.
But those Nerds find work elsewhere at competitors. The Brain Drain is working at GE. There has to be some kind of equation for this. Some economist from Princeton could win an Nobel in Economics for pinning this tail on the donkey. It is the reverse twist of John Nash’s Governing Dynamics in which the Bureaucrats do what’s best for themselves collectively by destroying every last morsel of intelligent competent life around them. It is also a form if ignorance finding and engineering it’s own bliss.
In a Bureaucracy the enemy is the guy with a lot of ideas.
That is a very dangerous person because they can make others look bad maybe even stupid. Plus they are “aggressive” in that they fight for mathematical ideas. There is no room for reason in an organization that intentionally suspends it as a hate crime. We don’t want “Teammates” bursting into tears and heading for the Safe room do we? No we want the Nerd running out of the room screaming when his brain hits the vacuum.
These egghead Nerds don’t like sharing. Uh Oh… In public school children are sent to the cleansing room for that infraction? In a Nerd driven world “others” can’t stand up and take a bow on behalf of the “Group Effort” and give themselves prizes and awards. Yikes as Ayn Rand once wrote, “Ideas are the product of individual thinking minds, not the product a collective stomach.” GE Takes this notion to the point of indigestion.
At HR, these potential insurrections “get handled” before they manifest. So applications get conveniently lost. Sometimes they fall off the desk into the garbage can. Whoops. And its good for a laugh. Don’t want those people here at GE. They are as bad as shareholders. Then again NOBODY is as bad as the shareholders!
So what is Flannery the product from within going to do?
Well he is definitely going to do the stereotypical wrong thing. He already has. At present shareholder confidence has eroded. Instead of the Board of limp-wristed Politicians saying they will pay the dividend this quarter, they have instead been cagey about it… calling it a “top priority.” Cramer has harped on it. Nobody is listening. But Cramer is right. Anyone that has been on the GE Board for the last five years needs to RESIGN.
Instead the stereotypical thing to do will be for Flannery to blame the prior CEO indirectly by taking as many write downs as possible and giving a bleak forecast. That way, as a typical Bureaucrat… he can lower expectations and hope the global economies pulls this mess out of a ditch on their own. This is known as the Kitchen sink approach. But that’s not good enough. Stockholder will be furious.
What Should Flannery Do?
For one thing he needs stockholder support so they best pay that freaking dividend and stop the market hemorrhaging or GE has the potential to tank down to $15 a share. You can’t make deals if your Stock is at a five year low. Every hedge fund and mutual fund will form activist gangs and tear this company apart the hard way.
Second thing he should do is look at some of the Honeywell aerospace divisions that are up for sale and he should merge GE Aerospace with them and spin the whole mess to GE and Honeywell Stockhoders. But unfortunately Flannery is no wheeler-dealer but a product from within so he is a preservationist. To pull this deal off then he will have to bring in Goldman or JP Morgan to package the deal and spin it.
If you Spin it Flannery then the REGULATORY IDIOTS can’t Block the merger because it increases competition instead of consolidating it.
Oh but Flannery can’t do that… He’s too busy getting ready to write down the GE Jet Fleet and beating the shareholders over the head with that one and the executive cars as if the Shares are to blame. Why should the shares take a beating over this? He thinks the shareholders serve him, not the other way around. Shareholders better prepare for the worst.
To stir real excitement, Flannery should bring in the investment Bankers and spit the company up entirely and spin all the divisions to the Shares just as ATT did in its divestiture. That would unlock real value and preserve core businesses and be a great excuse to cut heads before Christmas.
AND IF YOU DON’T THINK THIS IS SERIOUS…. WARREN BUFFETT DUMPED ALL HIS GE STOCK IN AUGUST 2017!
Still think Flannery is your guy? Buffett didn’t seem to think so.
Look at the crappy Deal that GE arranged to unload GE Capital. They took the $90 billion assets and gave it to Synchrony Finanical. In the process they offered to tender Synchrony stock for 1.0505 shares of GE which they retired. What happened? Big owners like Buffett moved to Synchrony while the Mom and Pops took it in the face. They got nothing out of this at all. Though the claim was that GE retiring about 6.6% of its float amounted to a share buyback of $20.4 billion. What a line of hogwash. Look at the stock price NOW! Where is your 20 billion buyback? It is down the toilet that’s where!
Had a shareholder unloaded the GE for the SYF they would have broke even. If they kept GE they were losers. SYF sells for $30 a share and GE for $23. At the time of the exchange the GE shares were roughly $30 a share. Those who exchanged for SYF shares nearly broke even and those that kept GE shares got killed.
GE CAPITAL accounted for 42% of GE profits. This deal was almost instantly oversubscribed and ultimately GE only accepted 30% of the GE Shareholders exchanges. So unless you were smart like Buffett, you got had.
I will go over other deals that have involved GE divesting various divisions but there is one common theme and that is the Shareholders did not benefit in any meaningful way from these deals. The company earnings fell but Management kept raising their salaries and compensations.
More Simply GE’s management is on the wrong page with GE Shareholders WHO OWN THIS CORPORATION! Flannery is a product of this Management Culture.
With Flannery this will be business as usual. Shareholders have reason to be seriously concerned. Buffett got out immediately after Flannery was basically installed. Many pension funds are now concerned. This is beginning to look like another IBM which we predicted six months ago would continue to sell down. We expect IBM to churn down to the Mid 70 dollar region. We have done articles on Watson and think it is junk. It certainly isn’t artificial intelligence ware. Click here for more on IBM.
Neither company excels in any one area anymore. They have big competitors and GE and IBM are simply not executing. Both are bureaucratic nightmares on their way to a slow extinction.
Discrimination and Deceptive practices. This is how GE drove down the value of GE Capital. This was Flannery’s division.
The CFPB called GE Capital Practices “discriminatory,” Synchrony discriminated against Latino Americans by excluding them from promotional deals if those customers wanted communications in Spanish or if they had mailing addresses in Puerto Rico. LOL.
I guess this was a total breakdown of the GE Sensitivity Training…
The real beauty of GE is that there is not a smidgen of urgency in any of the employees of this mess. They still take their long lunch breaks, don’t show up in the afternoon; leave early on Friday. No urgency at all about anything.
Yeah we are real meanies aren’t we? We actually believe a Corporation is a structure designed for shareholder profit. Apparently GE thinks otherwise at this point. That is why GE is on a collision course with reality.
Should you sell your GE?
If you like a company that runs like the US Postal Service and doesn’t value the Shareholders or in the case of the USPS the taxpayer then hang on to your shares. If you want this company selling off divisions where the shareholder get essentially nothing and management rakes in the compensation then stick with GE.
Our view is that GE will cut the Dividend. If this corporation valued Shareholder which it doesn’t they never would have lost Buffett. Buffett doesn’t sell unless he thinks there is a fundamental that has been breached. He also sold off over 1/3 of his IBM and continues to sell.
We don’t think GE management or their Political Board gives a rat’s ass about Shareholders. We think GE is going to have an earnings miss. Pension funds and mutual funds will be heading to the exits. There is simply no compelling reason to stick into this dying dinosaur with the GE Board and Flannery playing word games over the Dividend. As a shareholder it is my highest priority to NOT LOSE MY ASS in GE STOCK!
And where it the upside here? If GE turns in a poor quarter which is virtually guaranteed, the stock will sell off. Of course is GE cuts the dividend the stock sells off. If it has bad earning and does not cut the dividend then it still sells off. By shear logic this thing will sell off. That is why Flannery a GE Bureaucrat will kitchen sink the quarter and lower expectations. Then anything is possible. The stock could fall to $17.5 a share or even lower this next year. This is a dangerous company for the Mom and Pops.
Peltz seat on GE Board: Trust him if you want. Buybacks are not the answer to anything.
Trian’s Nelson Peltz a pal of Immelt has a board seat which took place after the GE Capital divestiture. It was Peltz pushing for GE Buybacks. He doesn’t want the company split up. He is pushing for GE industrial units. Unfortunately those units have large competitors and GE is the kind of Bureaucracy that Peltz hates.
The hidden weakness of buy backs is they give an artificial notion the share price is improving even if holes in the balance sheet are growing. In GEs case the buybacks have resulted in an 18% downside and GE’s own pension fund is underfunded. In simple terms NO BENEFIT AT ALL to the long term shares.
Buffett doesn’t like activist hedge funds on boards. But Buffett found himself in two large dead animal stocks and got out. One was GE the other was IBM.
Our view at this moment is that GE is a very dangerous stock at this moment with no clarity at all to drive the remaining business units. This could turn into a colossal train wreck.
AS LONG AS GE OWNS CNBC and has its own propaganda machine, it is incumbent on independent financial media like us and Zero Hedge to eat through the propaganda and warn when we must. Cramer just shook his head. He works for CNBC. What else could he do?
Immelt was a horrific political CEO that had no vision. His deals were rotten for the owners of General Electric, THE SHARE HOLDERS! Meanwhile the layers and layers of bureaucratic managers took full advantage. Now we have a pathetically weak multinational that can’t seem to compete in the global markets. It has an ever rising Pension Obligation that can sink this entire company just like GM was taken down.
Before Immelt, GE was the prize pig of all US Multinationals. Those days are gone. Now it is putrid politically correct diversity foie gras stuffed zombie that needs fixing. In simple terms it needs to be broken up. It can no longer afford the dead weight of its lavish retirement system.
This is a dangerous company just like IBM. Mom and Pop long term hold investors are at grave risk in both. The lavish 1970’s retirement days are over. RIPs have destroyed these once great companies. GM was the first big crackup and others will follow.
This is laughable. Peltz must be dead or something.
A Diversity pick for CFO… Gender Role model, Jamie Miller the CEO of GE Transportation has been kicked upstairs through the glass ceiling to fill the slot left by Bornstein who has left as CFO. What does she bring to the Table? Declining Revenues and declining earnings at GE Transportation. Way to go Jamie! Absolutely kick her upstairs.
Requisite string of beads, shoulder pads and the ever popular Obligatory Arm folded pose.
I just want to applaud. Diversity just makes me want to applaud and applaud and applaud. Wonder if she will bring the same Diversity Magic to GE Corp as she did to GE Transportation?
GE Has enough Diversity to Choke a Horse. No wonder nobody with brains wants to work there and play that idiotic game.
Goldman has advised shareholders to buy puts to make money as GE falls. Or you could test the theory and see if BS floats!