Tag Archives: Electric

General Electric: Expect A Big 2019
December 27, 2018 6:00 am|Comments (0)

To call 2018 a bad year for shareholders of General Electric (GE) would be a grave understatement. Throughout the year, the company has undergone expanded investigations by the government, shuffled top management, sold off various assets, and, on multiple occasions, revise down performance expectations before ultimately eliminating them for the foreseeable future. By practically all accounts, the industrial conglomerate has been hit harder, and in almost every way possible, more than it has ever been hit before in its more than 100-year history. Now, as 2019 approaches, the big question facing shareholders is “what’s next?” While it’s possible 2019 will bring with it even more pain than 2018 has, the more likely scenario is that the firm will use the New Year to restructure its operations (out of bankruptcy) and will, if all appropriate steps are taken, prepare for a turnaround that could bring to shareholders significant value.

Expect the breakup to occur

One thing that very few people will disagree with, I think, is that a breakup of General Electric must occur. The business has become so large that it is, from a management and capital allocation perspective, inefficient. When you have so many divisions, figuring out where and how to deploy limited capital can be hard, while as separate entities, the fact of the matter is that individual management teams can focus on their core operations. By breaking up, the firm will also, for the most part, rid itself of GE Capital, which is likely where any currently undisclosed problems probably reside.

As management indicated while John Flannery was still General Electric’s top dog, I fully expect the company to divest of itself its GE Healthcare segment in some way, shape, or form. Management has indicated that this will take place through an IPO, but it’s expected that shareholders might still retain some of the business, though all of this could change over time. We already know thanks to an announcement earlier this year that the firm is likely to continue winding down its ownership in Baker Hughes, a GE Company (BHGE), by selling off its stake in the firm, but a big question here might relate to timing. Since the end of September, shares of the oilfield services firm have plummeted 34.6%, so while the company has struck a deal for a sale of some of its stock, I suspect that additional sales will only happen following a recovery in unit price.

Following the spinoff of its Transportation segment into a commanding interest in Westinghouse Air Brake Technologies Corporation (WAB), also known as Wabtec, next year, I believe management will likely begin monetizing its interests there as well. Personally, I see monetizing both Wabtec and Baker Hughes further as a sizable mistake given the future outlook I have for both energy and transportation in the US, but the cash generated from these deals will allow management to reduce debt and/or to invest further into what operations are left.

One thing I would love to see transpire is the sale or spinning off of General Electric’s Power segment. At this time, the firm intends to separate that into two different sets of operations, which may be setting the stage to sell or spin off at least one of them. I see this new decision under CEO Culp as a sign that he understands Power is General Electric’s most significant problem at the moment, and since plans to retain power occurred while Flannery was still in charge, I have modest hope that management will divest of the segment or at least part of it.

Don’t expect a distribution hike

During its third quarter earnings release earlier this year, management made a significant change to General Electric’s dividend policy. They said that, effective this month, the company would only pay out $ 0.01 per share each quarter as a distribution, down from $ 0.12 per quarter previously. This decision, though controversial, will result in the firm’s annual distribution falling from $ 4.175 billion per year to just $ 347.925 million per year. While I would have loved to see it cut all the way to zero so that management would have even more cash to put toward debt reduction and investing in core assets, the savings seen are material regardless.

Investors hoping for the distribution to recover in the near future are, I think, engaging in wishful thinking. As of the end of its latest quarter, General Electric had cash, cash equivalents, restricted cash, and marketable securities worth $ 61.69 billion, which is a lot to work with, but it also had $ 114.97 billion worth of debt (inclusive of $ 2.70 billion of non-recourse debt). Admittedly, debt was down from the $ 134.59 billion the firm had at the end of its 2016 fiscal year, but as assets come off the books, debt also must be reduced. Some of this could be taken off by spinning off various assets (for instance, the firm could probably spin in the low tens of billions of dollars off with its Healthcare segment if it so decided), but it’s likely that a lot of the work toward reducing debt will be tied to asset sales and the cash that otherwise would have been allocated toward its quarterly dividends. Until management can reduce debt, it’s unlikely we’ll see a hike, and that probably won’t occur until, at the very best, late next year.

*Taken from Moody’s

Where does debt need to be in order for management to consider raising its distribution again? The short answer is that it’s anybody’s guess, but more likely than not, it’s by whatever amount would allow the firm’s credit rating to rise back into the As. As you can see in the image above, the firm’s credit rating, as calculated by Moody’s (MCO), used to be Aaa until it fell in 2009. Since then, the rating has fallen further and, today, the firm’s long-term debt rating is Baa1. This still places it in a category known as “investment grade,” as the image below illustrates, but the drop, even though it’s not on watch for a further downgrade at this time, will weigh on financing options until the situation can be improved.

*Taken from Moody’s

A lot of cost-cutting and wheeling-and-dealing

If General Electric is going to not only survive but thrive for the long haul, there’s no doubt the firm will need to cut costs. This is especially true if the company elects to keep its Power segment, but irrespective of it, certain corporate costs will need to be slashed as the firm works to spin off its assets. Although management has, in recent times, done well to push for cost cutting, when the company actually starts to break up, we will know whether, and to what extent, this is actually true. One strategy that could work quite well could be what the firm struck with Baker Hughes. As part of its share divestiture, the two companies have entered into a series of joint agreements that will keep their operations intertwined through things like guaranteed low pricing and joint buying of key assets. I suspect this kind of wheeling-and-dealing to continue as the conglomerate sells off more of itself.

Takeaway

Based on the data provided, it’s clear that 2018 has been awful for General Electric, but investors who are expecting more pain to follow through 2019 might be on the wrong side of the bet. If 2018 was the crash for the business, 2019 will likely be the start of a true recovery for the firm, especially if management can work to restructure the entity in the way that they should. Obviously, whether the firm is successful or not, investors should expect a tremendous amount of volatility during the process, but that could present opportunities to buy and sell at attractive prices for the emotionally-detached investor.

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.

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Here Is Why Wall Street Is Way Too Negative On General Electric
December 19, 2018 12:01 am|Comments (0)

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Chinese electric car makers, nurtured by state, now look for way out of glut
October 17, 2018 12:00 am|Comments (0)

HANGZHOU, China (Reuters) – Humming away in an industrial estate in the eastern Chinese resort city of Hangzhou, electric vehicle designer Automagic is one of hundreds of companies looking to ride the country’s wave of investment in clean transportation.

The company wants to find a niche in a crowded sector that already includes renewable equipment manufacturers, battery makers and property developers like the Evergrande Group, as well as established auto giants.

But not all of these electric vehicle hopefuls will make it to the finish line.

“This (large number of firms) is inevitable, because whenever there is an emerging technology or emerging industry, there must be a hundred schools of thought and a hundred flowers blooming,” said Zhou Xuan, Automagic’s general manager, referring to Chinese leader Mao Zedong’s ill-fated 1956 “Hundred Flowers” campaign aimed at encouraging new ideas.

China is using preferential policies and brute manufacturing power to position itself at the forefront of global efforts to electrify transportation. By the end of 2017, ownership of new energy vehicles (NEV) – those powered by fuels other than petrol – reached 1.8 million in China, over half the world’s total.

With market expectations high, Chinese EV maker NIO, a rival to Tesla, launched a high-profile IPO in New York last month.

In July, the industry ministry published a list of 428 recommended NEV designs built by 118 enterprises throughout the country. It included not only established carmakers like FAW Group and Geely Automobiles, but also small, new entrants with names like Greenwheel, Wuhu Bodge Automobiles and Jiangsu Friendly Cars.

But regulators are already concerned about overcapacity and “blind development.” As subsidies are cut, smaller start-ups need to develop a competitive edge.

“After a period of intense competition, the rocks will appear, and the weak will be consolidated or eliminated,” Zhou said.

STRATEGIC GLUTS

Overcapacity has been a persistent concern for many Chinese industries, with thousands of firms, backed by growth-hungry local governments and supported by risky loans, expanding quickly.

Over the years, China has been forced to take action against price-sapping supply gluts in steel, coal and solar panels, among others.

Electric vehicles could be next, as local governments feel pressure to create champions while following state instructions to “upgrade” their heavy industrial economies.

Some executives say the market is already distorted by subsidies granted to inefficient and poorly performing firms.

“Right now, the rapid growth of NEVs is not a market choice but government-guided behavior, with growth stimulated by subsidies,” said Li Lei, deputy director of the new energy department of Jiangxi Dacheng Autos, a new joint venture carmaker in eastern China’s Jiangxi province.

Though sales soared 88 percent in the first eight months of 2018, hitting 601,000 units, the National Development and Reform Commission (NDRC) has promised to tackle irrational growth in the sector.

In draft rules released this year, it said it would “plan and arrange the new energy vehicle industry scientifically,” and block new production capacity in regions where the utilization rate was less than 80 percent.

But China has often relied on “strategic” supply gluts to boost competitiveness. Excess production in solar power forced producers to reduce costs and compete, subsidy-free, with conventional energy sources.

Liu Xiaolu, sales manager with ICONIQ Motors, a Tianjin-based luxury electric vehicle maker, said the large number of companies could be a “necessary stage” of development for the sector.

“You cannot say that 20 enterprises will definitely be able to develop the entire industry by themselves, and it probably needs everyone to come together, and then gradually get eliminated afterwards,” he said.

COMPETITIVE EDGE

Established automakers told Reuters they’d already had plenty of time to prepare for the shift towards electric transportation.

Xu Hongfei, general manager with Zotye Automobile, a mid-sized Chinese automaker, said it had been preparing for China’s “exit schedule” from traditional vehicles for more than a decade and had developed core technologies such as batteries.

With a staff of 20, Automagic was founded in 2015 by former engineers from IBM and Geely. It is talking with partners to bring its models to the market.

The company is focusing on small, short-distance family vehicles rather than large-scale cars built by the likes of BYD. It is also seeking better ways to produce, recharge and recycle batteries.

“The most important point is that new energy vehicles need to be energy efficient, with low energy consumption, so we focus on cutting weight and making cars smaller so battery use can be reduced,” said Zhong Jin, Automagic’s co-founder and chief executive.

GCL, one of China’s biggest renewable developers, plans to turn its “new energy town” at Jurong in Jiangsu province into a major manufacturing center with its expertise in batteries and recycling expertise, and even create a battery rental system.

Although all the companies are trying to get an edge through innovation, Li of Jiangxi Dacheng said success could simply come down to market positioning.

“Our company doesn’t have any very big advantages or very big disadvantages and competition is dependent first on branding, second on financing, and third on sales channels,” he said.

Additional reporting by Shanghai newsroom; Editing by Gerry Doyle

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The Cars of the Paris Auto Show Reveal a Quirky, Urban, Electric Future
October 7, 2018 12:01 am|Comments (0)

The Renault Ez-Ultimo brings the high-end glitz to the show this year. Just because cities of the future may prioritize ride sharing over private cars doesn’t mean you should have to slum it on the way to opening night at the Opéra national de Paris.

This rounded bronze box is about as far from a production car as a concept can be (could those wheels even turn? where’s the ground clearance for cobbled streets?) but Renault says it shows a vision of an autonomous future, where passengers demand more from vehicles. In particular, the interior “reflects French elegance” with wood, leather, and marble.

Citroën went the opposite direction, unveiling a very real, very modest EV. The DS3 Crossback E-Tense is a fashionable crossover SUV, and an update on Citroen’s tres popular DS3 supermini car. The electric version comes with a 50-kWh battery—about half that of a high-end Tesla—a range of 186 miles on the generous European test cycle, and a 0-60 time of 8.7 seconds. None of those specs are going to blow buyers away, but at the right (to be revealed) price, the quirky car, with sharp angles and odd window cutouts, could rival the Nissan Leaf or Renault Zoe, as a city runabout.

Europe has taken styling cues from the US for the Peugeot E-Legend concept, albeit with a little added flair. There are plenty of muscle car hints in the styling, with a side profile reminiscent of the modern Dodge Challenger, and a Mustang-like front squint. Of course it’s a concept, so it’s electric and autonomous, and supposed to show that those things don’t have to be boring or bland.

The retro theme continues inside with velvet upholstery and fake wood screensavers for the displays when they aren’t in use. It’ll apparently have a 100-kWh battery pack and all-wheel drive, but it’s so concept-y that wise money should be on all that potentially changing, if and when the E-Legend makes it to production.

It wouldn’t be a European auto show without a city car, and Smart is the brand synonymous with cars so small they can be parked end-on to a curb. The Smart Forease moves that theme into an electric age. The rather optimistic concept banks on the future always being sunny, given that it doesn’t have a roof. Not even an optional one. (Have these people been to Europe?)

Smart has already stopped the sales of all internal combustion engined cars in the US, and if this car makes it across the Atlantic (and to reality) it could find a place in some Californian garages. The Golden State has good EV electric rebates, and as close to a guarantee of good weather as you’re going to find.

Infiniti is keeping it real with its Project Black S hybrid, based on a Q60 coupe and its V6 engine. Infiniti engineers turned to electrification, and lessons from partner Renault’s Formula 1 team (there’s the French connection) to give the machine an e-boost.

It’s a hybrid, but one that delivers performance rather than economy. The three motors add 213 horsepower to bring the total to 563, and drop the 0-60 mph time to under four seconds.

Toyota didn’t use the Paris show to unveil radical new concepts, but did introduce a term that will be new to most buyers: self-charging hybrids. This is no magical perpetual motion-type technology: Self-charging hybrids are just cars that can run on battery power, but can’t be plugged in. The type Toyota has been selling for years with the Prius, when they used to be just called “hybrids.” As they’ve gone from being radical, to commonplace, to somewhat lame given the influx of more robust electric options, Toyota is looking to rebrand to remind people that the tech is still quite clever, and does save fuel.

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4 Surprising Side Effects of Electric Autonomous Vehicles
June 3, 2018 6:03 am|Comments (0)

, From Chicago, I write about green technology, energy, environment. Opinions expressed by Forbes Contributors are their own.

LAS VEGAS, NV – The Nissan IMx, an all-electric crossover concept vehicle offering fully autonomous operation and a driving range of more than 600 kilometers, is on display during CES 2018 at the Las Vegas Convention Center earlier this year. (Photo by Alex Wong/Getty Images)

First of two parts

Electric autonomous vehicles are expected to drastically reduce greenhouse gas emissions, traffic congestion, parking demand, insurance costs and traffic fatalities. They’ll eliminate the 90 percent of traffic accidents attributed to human error.

Those effects are well celebrated. But they will likely have some equally startling side effects, once the three trends of electric drive, connectivity and autonomy converge.

“Those three items collectively will lead to a big change in the way we travel,” said Edward J. Regan, senior vice president of the consulting firm CDM Smith. “The convergence of these things will have a big impact, and it’s going to affect people’s decisions on how they travel and if they choose to own a car.”

The big trigger point will come when vehicles achieve level-five autonomy, Regan said, operating completely driverless without geographic restrictions. When that happens, according to Regan and other experts at the Transport Chicago Conference in Chicago Friday, we’ll see side effects like these:

1 Cars Will Last Longer

Because they have fewer moving parts and don’t rely on explosive heat, electric vehicles are expected to last longer than internal combustion vehicles. According to Regan, they could last almost five times longer.

Page 1 / 3

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4 Surprising Side Effects of Electric Autonomous Vehicles
June 3, 2018 6:03 am|Comments (0)

, From Chicago, I write about green technology, energy, environment. Opinions expressed by Forbes Contributors are their own.

LAS VEGAS, NV – The Nissan IMx, an all-electric crossover concept vehicle offering fully autonomous operation and a driving range of more than 600 kilometers, is on display during CES 2018 at the Las Vegas Convention Center earlier this year. (Photo by Alex Wong/Getty Images)

First of two parts

Electric autonomous vehicles are expected to drastically reduce greenhouse gas emissions, traffic congestion, parking demand, insurance costs and traffic fatalities. They’ll eliminate the 90 percent of traffic accidents attributed to human error.

Those effects are well celebrated. But they will likely have some equally startling side effects, once the three trends of electric drive, connectivity and autonomy converge.

“Those three items collectively will lead to a big change in the way we travel,” said Edward J. Regan, senior vice president of the consulting firm CDM Smith. “The convergence of these things will have a big impact, and it’s going to affect people’s decisions on how they travel and if they choose to own a car.”

The big trigger point will come when vehicles achieve level-five autonomy, Regan said, operating completely driverless without geographic restrictions. When that happens, according to Regan and other experts at the Transport Chicago Conference in Chicago Friday, we’ll see side effects like these:

1 Cars Will Last Longer

Because they have fewer moving parts and don’t rely on explosive heat, electric vehicles are expected to last longer than internal combustion vehicles. According to Regan, they could last almost five times longer.

Page 1 / 3

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Charging Electric Scooters Is a Profitable, Fun—and Occasionally Dangerous—Youth Trend
May 20, 2018 6:01 pm|Comments (0)

The newest big trend in tech startups is in turn fueling an emergent youth culture, as teenagers and young adults spend their free time collecting and charging electric scooters. Some compare it to a game—one that they’re getting paid pretty well for playing, but also comes with some real-world risks.

As reported by The Atlantic, the part-time gig is sometimes called ‘Bird hunting.’ That name comes from Bird, the most prominent company in a wave of new “dockless” scooter and bike rental startups, which use smartphone apps to both rent and track light vehicles.

The systems offer a potentially innovative solution to urban transportation, particularly what’s known as the “last mile” problem: how to get users of public transit from stations to their doorsteps. Because they can be dropped off anywhere, the rental vehicles can be more convenient for riders than personal scooters or bikes (though they can also, according to some city officials, create a “public nuisance”).

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The apparent convenience of those systems, though, is created by a lot of behind-the-scenes work, much of it done by contractors, known as “chargers,” who collect and charge the scooters. Several young chargers described their work to The Atlantic as a fun side-hustle—one even compared it to playing Pokémon GO, since it involves using an app to find the GPS-tagged scooters. The “prizes” for finding scooters are also game-like, with chargers paid more for retrieving scooters that are harder to find. Young chargers report teaming up to do the work faster, starting what amount to small businesses with some socializing thrown in for good measure.

Rewards can range up to $ 20 for a single scooter, and chargers described making up to several hundred dollars per night. Those rewards are likely to decline, assuming that Bird and other startups are following the standard tech-industry model of sacrificing revenue for market share early on (at least $ 250 million in venture capital supports Bird and similar companies). But the game-like aspects of charging may make workers less price sensitive.

That said, just as Uber has become a primary source of income for many of its drivers, it’s clear that recharging scooters is not a game for everyone. Chargers interviewed by The Atlantic describe occasional conflicts over scooter bounties, manipulation of the reward systems, and outright theft of the scooters, which criminals have been known to chop up for parts. Perhaps worst of all, some report that criminals are hunting the hunters—using scooters as bait, then mugging the chargers who arrive to retrieve them.

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Electrified roads: Swedish project could slash cost of electric vehicles
May 14, 2018 6:01 pm|Comments (0)

OSLO (Reuters) – An electrified road in Sweden that is the first in the world to charge vehicles as they drive along is showing promise and could potentially help cut the high cost of electric cars, project backers Vattenfall [VATN.UL] and Elways told Reuters.

The state-funded project, named eRoadArlanda and costing about 50 million crowns ($ 5.82 million), uses a modified electric truck that moves cargo from Stockholm’s Arlanda airport to Postnord’s nearby logistics hub to test the technology.

A electrified rail embedded in the tarmac of the 2-km-long (1.24 miles) road charges the truck automatically as it travels above it. A movable arm attached to the truck detects the rail’s location in the road, and charging stops when the vehicle is overtaking or coming to a halt.

The system also calculates the vehicle’s energy consumption, which enables electricity costs to be debited per vehicle and user.

Elways’ chief executive Gunnar Asplund said the charging while driving would mean electric cars no longer need big batteries — which can be half the cost of an electric car — to ensure they have enough power to travel a useful distance.

“The technology offers infinite range — range anxiety disappears” he said. “Electrified roads will allow smaller batteries and can make electric cars even cheaper than fossil fuel ones.”

Asplund said the Swedish state, which is funding the project, was happy with the results so far, with the only issue — now resolved — having been dirt accumulating on the rail.

Elways has patented the electric rail technology and is part of a Swedish consortium backing the eRoadArlanda project that also includes infrastructure company NCC and utility Vattenfall, which provides power from the national grid to the rail.

“Such roads will allow (electric vehicles) to move long distances without big, costly and heavy batteries,” said Markus Fischer, a Vattenfall spokesman, adding that installing the arm in new cars would be cheaper than retrofitting current models.

Vattenfall said in a statement electrified roads could reduce carbon dioxide emissions from lorries, which account for about 25 percent of total road traffic emissions.

“The investment cost per kilometer is estimated to be less than that of using overhead lines, as is the impact on the landscape,” it added.

Testing at eRoadArlanda started in April and will last at least 12 months so that the electric truck can use it under different weather conditions.

Editing by Catherine Evans

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Audi eyes 800,000 electric and hybrid car sales in 2025
May 8, 2018 6:07 pm|Comments (0)

BERLIN (Reuters) – German premium brand Audi on Tuesday said it plans to sell about 800,000 battery-electric and hybrid powered cars in 2025, as it seeks to catch up with electric car rival Tesla and emerge from a damaging emissions-cheating scandal.

The logo of the German car manufacturer Audi is pictured at the training center during a media tour in San Jose Chilapa, Mexico April 19, 2018. REUTERS/Henry Romero

Audi’s image has been tarnished by regulatory probes investigating what role its engineers may have played in designing engine management software to cheat modern emissions tests.

Audi will launch more than 20 electrified vehicles by 2025 thanks to an ability for using parent Volkswagen’s (VOWG_p.DE) new MEB modular platform and vehicle underpinnings jointly developed with premium sibling Porsche, it said.

That’s slightly more ambitious than the 20 electrified vehicles Audi had previously guided for. Audi said it would launch the cars without undermining its 8-10 percent operating margin target.

Audi declined to provide details about how many fully battery electric, and how many hybrid cars it will sell by 2025. Last year, it sold about 16,000 semi-electric vehicles and it still lacks a fully electric model in its lineup.

The Ingolstadt, Germany-based brand, which delivered 1.88 million cars globally in 2017 currently offers three plug-in hybrid vehicles.

In August, Audi will launch the e-tron sport utility vehicle, its first serial all-electric model.

Demand for large sports utility vehicles has helped make Audi Volkswagen’s main profit driver.

On Tuesday Germany’s Transport Ministry said the KBA vehicle authority was investigating a further 60,000 diesel-engined Audi cars for suspected illegal manipulation software which may have helped the carmaker cheat emissions tests.

To fund its electric-vehicle offensive through to the middle of the next decade, Audi has extended by three years until 2025, an investment program worth about 40 billion euros ($ 47.42 billion), it said.

To free up funds for its electric-car push Audi is ceasing production of some models, including two-door versions of its A1 and A3 vehicle lines, as well as cutting component and administration costs. It now aims to save at least 10 billion euros by 2022.

($ 1 = 0.8435 euros)

Reporting by Andreas Cremer; Editing by Edward Taylor

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General Electric: Finally, It's Over
April 23, 2018 6:11 pm|Comments (0)


Image Source

So far, the word “unpredictable” seems to be one of the most-used descriptive choices when characterizing the events of 2018. And, broadly speaking, this appears to be an accurate term. Just a few months ago, if you were to suggest that the NASDAQ would be seeing “flash crash” activity while General Electric (NYSE:GE) was forming a long-term bottom in a multi-year decline, you might have been laughed out of the room. But this appears to be where we are, given the market’s positive reaction to GE’s April 20th announcements and the generalized lack of certainty in almost every aspect of this current financial environment. We have been saying that the stock declines below $ 13 per share would be the worst of it for holders of GE and we maintain this view in light of the company’s recent strategic moves. We are long GE with a bullish stance on the stock as a long-term hold for portfolio strategies.

Chart: CNN Money

Many analysts have argued that there are fundamental earnings problems within the company itself. But, since this is the most “mega” of the “mega-conglomerates” it is critical to assess the trends over at least three years before drawing any drastic conclusions. The earnings performance at GE has been erratic since 2015. But the revenue side of the equation has been much more stable over the same period.

This implies that GE’s problems are internal (fixable) rather than external (not fixable). This is good news, as long as the company is able to reduce operations and focus on the businesses. Currently, jet engines, power plants, and healthcare machines are GE’s biggest money-makers – and we would prefer to see more of the company’s attention (and resources) focused on streamlining these segments.

Earnings Trend Chart: Yahoo Finance

On the other side of the ledger, the power, oil, and gas markets are still presenting major challenges for General Electric, with revenue in those segments showing significant weakness in Q1. Operating losses in the power unit were lower by 38%, but the company has said that improvements have been made in service operation and cost execution for the segment. Operating losses in oil and gas fell by 30%. Other negatives were seen in the GE Capital unit, as it continues with its weaker trends.

For the first quarter, net losses came in at 14 cents per share (roughly in-line with last year’s performance for the period). On a continuing basis, net incomes came in at 4 cents per share (a solid increase from the in the 1 cent per share seen a year ago). On an adjusted basis, the company posted earnings of 16 cents per share (well above analyst estimates calling for 11 cents per share). Total revenues for the quarter gained by 7% (to $ 28.66 billion against expectations of $ 27.45 billion). In the accompanying statement, Flannery highlighted the fact that margins, industrial earnings, and free cash flows are all gaining on an annualized basis – and this is all good news for dividend investors.

What really matters here is the strategic direction, and the willingness within those in management to cut the fat and become a more modern company. There are still very real questions with respect to whether or not Flannery & Co. will be able to address those needs. But we do know that many of the correct moves have already been made. This includes the decisions to sell NBC, Universal Studios, and its real estate portfolio.

These were areas where the company could not reasonably hope to compete, and sacrifices needed to be made in order to preserve as much of the dividend as possible. Another example of a strategic move in the “right” direction was deal to sell GE’s appliance division for $ 5.6 billion. GE is still in recovery-mode, and this is the short-term outlook that should define the long-term outlook for quite some time.

GE Chart Analysis: Dividend-Investments.com

The key point here is that the word “recovery” implies gradual strengthening. In market terms, that equates to positive price movement, and we view GE as a long-term hold with an attractive yield offering for investors. GE cut industrial structural costs by $ 805 million, and they expect to beat prior goals to reduce costs by $ 2 billion for all of 2018. This is strong evidence of progress, and it has not yet been reflected in share prices.

Shorter-term, we have seen some upside and this is an indication that the market is liking what it sees (so far, at least). Since aviation, healthcare, and transportation divisions all experienced double-digit profit growth, these moves should be viewed as valid. Prior resistance under $ 14 should now be expected to act as price support and we believe that a long-term bottom has likely formed at $ 12.80.

What is your position on GE? We look forward to reading your comments. Stay tuned to Dividend Investors and receive our next alerts by clicking the “Follow” button at the top of the page.

Disclosure: I am/we are long GE.

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.

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