Yesterday, GE Vice Chairman and GE Capital President and CEO Mike Neal hosted the third dedicated GE Capital investor meeting this year. He presented a detailed quarterly report on GE Capital’s performance and how the business is positioned for 2010. The overall message from the meeting was that GE Capital was performing as projected back in March and that the business would earn an expected $2.0-2.5 billion in 2009 with losses peaking and earnings growth flat in 2010.
Mike and his leadership provided details around funding, risk management, regulatory reform and operations. With the financial crisis subsiding and with fewer competitors, GE Capital has a strong and advantaged business model that is generating better margins and is positioned to perform. The business is fully funded through 2010 with costs of funds improving, more diverse sources and ample liquidity. This position of strength is helping the business weather a tough economic cycle generating losses and impairments, which should peak in 2010 and match the $12-13 billion expected this year. Even with these projected losses, the business is well capitalized and has low leverage of approximately 5.6:1.
Mike also gave an update on how the financial regulatory reform proposals could affect GE Capital. As stated on numerous occasions, GE Capital supports systemic regulatory reform and is preparing for more regulation. While it is still early in the process, Mike said there are no current proposals to separate GE and GE Capital.
Ron Pressman from Real Estate and Dan Henson from Commercial Lending and Leasing — Americas, gave detailed presentations on their businesses. Ron described how the real estate team is executing through a tough environment and addressed a number of important questions on the value of the real estate portfolio, including giving an updated unrealized equity loss of $7 billion, an increase from $5 billion. These risks are manageable and within GE Capital’s overall framework. In our core lending and leasing business, Dan showed how our originate-to-hold model backed by hard assets and industry expertise is helping the business manage losses and generate earnings.
The presentation concluded with Mike presenting a 2010 earnings outlook by business. Mike summarized by pointing out that GE Capital is on track to deliver on its 2009 forecast and shrink to $400 billion in assets in 2012, and with improving margins and losses expected to peak in 2010, GE Capital is positioned for earnings growth in 2011.
Learn more about GE Capital in these GE Reports stories:
* “Doctor’s orders: $1B in GE Capital healthcare loans”
* “GE Capital’s loan helps grow 150 jobs in Shreveport” on GE Reports
* “Dallas keeps on truckin’ with GE Capital” on GE Reports
* “GE Capital: Helping bankrupt businesses bounce back”
* “Recapping GE Capital’s business update”
* Learn more about GE Capital on its website
* See the presentation slides
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Breaking up GECS from the parent company is idiotic. Why punish a company that was able to execute through a real tough credit cycle without having to take taxpayer money via TARP etc. Taxpayers actually made money on the FDIC fees GECS paid when it used the TGLP Facilities (Commercial Paper program).
Having GECS and GE parent is actually a much better solution than having them separate in terms of risk to the economy or taxpayers since they can hedge off each other.
Everyone else had to get TARP except GECS. Congress needs to realize this and not punish a company for the mistakes of others.
GECS/GE will just come out as a stronger entity over time.
Let’s face it….Does the world believe your nice presentation? After you greed executives turned a Execellent company to BS…
Read the below link.
http://compliancex.typepad.com/compliancex/2009/08/sec-fines-ge-50-million-for-accounting-misdeeds.html
Thank you very much for your cooperation.
I agree somewhat with “Longterm Investor” that GECS is an important part of GE – It provides financing and income possibilites other companies o not have.
However, when mis-managed such as what we have seen is proof enough that the leaders of GE have fallen into the same Greed of others.
We have all heard how GE Risk Managers can “see around corners” and how earnings are “in the bag” – “the divdend is safe” only to be deceived into believeing.
As CEO Immelt should go for allowing such.
When ask at one of our recent Annual Meetings about GE’s Debt/Equity Ratio Sherrin and Immelt commented it was appropriate for a company such as GE – only to have the very existance of GE to continue be threatened as the truth came forward and billions of sharehold value were lost. Another lie by Immelt.
For the BOD’s – the same applies for being equally responsible allowing GE to follow in the steps of Enron or Worldcom.
Let us all hope we don’t wakeup one morning and see headlines defining our demise.
“HE WHO BELITTLES YOU IS ONLY TRYING TO CUT YOU DOWN TO his/her size.” So true about Immelt and GE!
“He” = [Immelt, Sherin, Neal [MAN] K. Morgan [GE Capital]…ALL Direct Reports] to the number one Man believing in GREED AND MEANNESS!
Mr. Immelt THANK YOU for putting GE down….Would YOU NOT consider the $50M fine from the SEC be FRAUD and GREED…Thank you very much for DIGGING deep… yourself and your Direct Reports a grave!
So who created this $50M fine FRAUD…Immelt, Sherin and why are they currently employees. Should they be behind bars just like Madoff and Martha Stewart? What happen to INTEGRITY and COMPLIANCE at GE? Why treat GE any different? Is GE above the law?
The World couldn’t ask for a better and TRUE statement from YOU and GE!
Why people choose to make something that is relatively easy, so ridiculously complicated is beyond me. No, I am not a big fan of Jeff Immelt, but you gotta love this STOCK PRICE! This company is going to earn, at a minimum, thirteen billion dollars in 2010.
divide 13 by 10.6 billion shares outstanding, and that equals 1.23 in earnings for 2010. At a modest p/e multiple of 15, that equates into a stock price of 18.45, representing an annualized rate of return of 15.67% on invested capital, before dividends, at current market prices. At a market price of 15.95, more than 2/3′s of your cost basis is covered in book value alone. Which, by the way, is growing at a 5% clip every quarter.
With the exception of Pfizer, I cannot find anything else that is this attractive.
I’ve been following this stock for more than 9 years and it has never been this cheap. People were saying the same thing about Apple in 2001, when it was trading for less than the CASH it had on its balance sheet. That stock is up more than 800% since then. Pessimism, is a beautiful thing when it comes to investing, for it creates some real bargains.
I don’t know about you, but I love to buy things on sale. This stock was up more than 12% in November alone, vs. 2% for the major indexes.
To give you some perspective, we haven’t had a negative GDP, on a world wide basis, since 1940!!! You have to go back 69 YEARS to find a global economic system this weak, and it took a World War to do it. Thus, the odds of a recovery in 2010 are enormously favorable. In the meantime, GE stock is dirt freaking cheap…..mind the gap.
Thomas Edmonds
Thomas Edmonds – JI has lied more than once, deceiving longterm investors. Now he wants to repent see below taken from a recent WSJ article:
“When General Electric Co. Chairman and Chief Executive Jeff Immelt takes the “Saturday Night Live” stage at Rockefeller Center Tuesday for his annual update for investors, he will aim to persuade them he can guide GE to a new era of growth despite a cloudy forecast for 2010.
In recent appearances, the 53-year-old Mr. Immelt has said he is “humbler and hungrier” because of the recent credit crisis and recession, which severely damaged GE. He has also defended his record while stressing that he has learned from his mistakes.”
Thomas – how do you deal with someone who lies to you?
I’ve been with GE Capital for some years now and what disappoints me is that some of the jobs they give us here are so mundane im sure that im destroying more brain cells here than drinking a bottle of Jack Daniels, listening to calls day in day out to determine if we are doing customer service right is utter nonsense, many of us leaders here have degree’s in finance, economics etc where is development, stop paying us top dollars to for doing nothing and get us creating again for @#$# sake.