General Electric Has A Hidden Growth Story

While General Electric (GE) is a jumbled mess, the company does have three key operating divisions that are actually experiencing profitable growth. General Electric has clouded the fact that the company has three separate profitable growth stories; Aviation, Healthcare, and Renewable Energy. Wall Street would value these three divisions much higher if they weren't tied to the rest of General Electric. Management's challenge is to communicate to Wall Street the company's growth potential.

The message Wall Street is getting from General Electric is that it is adrift with shrinking revenues, and that its best alternative to drive shareholder value is cost-cutting. Just today the Power division announced it is laying off 12,000 employees to save $1 billion per year. The recent negative price action in the stock is being driven by three main factors. First and foremost Wall Street placed a lot of hope in the new management team led by John Flannery and rather than starting with action he started with a strategic review. Second, the company threw in the kitchen sink and lowered forward guidance. And the final straw came on November 13 when General Electric announced it is cutting its dividend by 50%.

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