GE responds to Standard & Poor’s ratings action
Today, Standard & Poor’s announced that it has downgraded GE and GE Capital’s long-term credit rating a single notch, from AAA to AA+ with a “stable” outlook. Our short-term ratings of A-1+ were reaffirmed and GE does not anticipate any significant operational or funding impacts from this change. GE Capital is one of the only financial services companies in the world with a rating as high as AA+. S&P defines a company with this rating as having a “very strong capacity to meet its financial commitments.” Also, S&P’s “stable” outlook means the rating is unlikely to change in the next six months to two years.
* Read GE’s statement
S&P said in its report: “The ratings on GE continue to reflect our view of its excellent business risk profile, its significant cash flow and liquidity, its strong corporate governance, and management’s commitment to maintaining very high credit quality… We expect GE’s broad business and geographic diversity to allow for continued generous cash flow alongside a strong financial risk profile and maintenance of adequate capital at GECC [GE Capital].”
* Read S&P’s report on GE
I got paid this week bought 100 more shares. I expected one notch even though the spreads on fixed indicated worse case
GE every day send out different messages…yesterday GE Stock did well…today we will not know until later today.
I and many others have NO MORE TRUST in GE!!!
(If Immelt can retract then so can the rest of us — breaking silence to show my frustration).
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Sound the trumpets all you want. The fact is you still lost AAA. So, either AAA simply holds no weight and the entire rating scheme should be abolished (which includes doing away with Moody’s, S&P, and Fitch); or, current management screwed up royally and got the company into the situation where they lost the respect that AAA used to hold. Which is it?
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Equity price is up short-term (wouldn’t mind seeing it go up further but I have my doubts that the "shorts" are done with it) but that doesn’t hide the fact that we still went through one of the greatest destructions of shareholder value the world has ever seen and we lost the dividend as well. How do you sugar coat those facts to long-term (and long time) GE shareholders?
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I respect what Mr. Dimon said to Paulson in a letter, "It is not the critic who counts, not the man who points out how the strong man stumbled…The credit belongs to the man/woman who is actually in the arena; whose face is marred by dirt and sweat and blood…his place shall never be with those cold and timid souls who know neither victory nor defeat."
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It’s based on those words that I respect GE management while they have tried to work through this period (I can only imagine the amount of hours they are presently working to turn this thing around). However, those shareholders that have stuck around throughout the turmoil deserve an apology. We were in the "arena" (i.e. our money was invested in GE) and we entrusted this group of leadership with our resources and they had/have the responsibility to protect, preserve, and grow shareholder equity. What we’ve dealt with the last year is simply ridiculous and it was current leadership that got us into this mess (with the aid of an economic tsunami mind you).
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I’m not about to jump up and down and sing praises simply because GE "only" dropped to AA+ and because the word "stable" finally came back into the GE discussions. "Stability" should never have been put at risk.
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As a GE shareholder, I would sure like to see GE discuss how this period in will be a documented "lessons learned" for future GE leaders, how "stability" to the "n’th" degree will be the watchword going forward (as part of 6 Sigma training perhaps), and acknowledgment that GE will never get itself into this kind of mess again. Basically, I want to know I can invest my money in GE and not witness it evaporate overnight.
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I feel for those that had to sell GE stock for whatever reason this last year. I also feel for retired holders of GE stock that lost money from the dividend cut. Before people start gloating about "only" dropping to AA+, I think they should stop and think about the reality that these people have had to cope with. I feel fortunate that I’m in a position to ride out the storm and possibly see my GE stock appreciate over time. Many simply aren’t as fortunate.
The rating game goes on…on notch down to AA+ is better than…expecting short term…
1. Moody shoe drop comes next…
2. GECC March 19 updates of Dec 2nd 2008 GECC data briefing
3. the most expected would be the grand picture of GE April report card…
4. GE annual meeting
5. All accountability relies on GE outstanding performances and deliverables, not thing else…
I just received in the mail my GE annual report and proxy materials.
AAA, AA … who cares ? The writing was on the wall mid last yr. Life goes on for GE..maybe a couple of blows to come this yr..and then the plateau..and then the move up. good riddance this AAA debate…was very distracting..well done o the learship and general staff at GE/ GECS. Carry on with life..and good luck.
We are holding this stock for the next +20 years. The economy’s in the crapper, so here’s a nod to the management team at GE for managing this company through – and hopefully some day out of – these dark times we’re all traveling through…
"Thank you" to the management team. And keep up the good work.
PS I love the gereports.com site…
I am hoping that GE will be the leader to pull the global economy out of this ecomomic tsunami and I again can see value in my longtime GE portfolio.
I want to buy GE stocks soon. I am reading about this credit rating drop and with the divident cut in February, I am wondering if I should. I know GE has been around for a very long time and is not going anywhere, but will the stock climb back to 38 dollars in the next year or two?
38 dollars defintely in the next 3.8 yrs ! BUY BUY !
Immelt and the GE management team have …
1. missed 100% of ‘08 performance goals;
2. managed GE stock value to record lows from $50+/share when Immelt was appointed CEO;
3. managed GE pension fund to a multi billion dollar under-funded position from a healthy over-funded position in ‘07;
4. cut GE’s stock dividend 68%; and
5. managed GE out of its AAA rating!!!
Is this what RMay calls "good work???" What does it take to make GE shareholders angry???
Oh, believe me, I am not happy about the stock price going down from the 30’s, which is where I purchased some but not all of my shares. And yes, the GECC damage could have been a bigger nightmare. But in light of the amazing implosion that’s taken place in the global economy I think not that they’ve "done well," but rather they’ve done a "good job" managing the company in light of this turmoil.
I can imagine that a lot of thought goes into every decision they make, from cutting the dividend to managing the company to an AAA status even if they just got nicked down to AA.
But, it could be worse… Bear Stearns, Lehmann, Circuit City, GM, Ford, Chrysler, B of A, Citigroup (talk about incompetence… those jackasses ought to be taken out behind the woodshed with a hickory switch and have the ever lovin’ crap beaten out of them).
I am more angry at the greed that has brought this economy to its knees than I am at how GE has mismanaged the company. Do I want the stock to go back up? Yes. Will it do that this week? No. But when the economy recovers I believe that GE will continue to be one of the strongest companies in the world. And truth is we all know that if GE ever tanked we’d have a helluva lot more to worry about than that fact unto itself.
Do what I am doing.. take the long view and give it time… Really, we have no other options, or we wouldn’t be shareholders. And BTW I bought more at 7…
RMay … how long do you expect to live? GE’s stock performed poorly even during the bull market run up! GE’s management team was supposed to be better than the best yet it was glacially slow in responding to the financial melt-down. Had it acted with Jack’s ’speed and simplicity,’ it would have unloaded its industrial and GECC junk long before it became too late to do so! Did GE’s CEC, LRF, Strategic Planning, 6-Sigma/DFSS, FP&A, due diligence and audit, etc. processes all fail to give Immelt and his management team a clue as to what was happening in the real world???
I would like to know HELP’s source for the pension funding. My source says under funded by .9 Billion which is not multi billion. The supplemental pension obligation is 3 billion+ and has always been non funded. Where did you get your data?
Agree Mr burnt, GE has been around longer than these ratings agencies and how quickly we forget hey it has been a few months, I guess as a ratings agency your beyond reproach. We’ll I just hope they are setting up the biggest financial Enquiry(Inquisition) we have ever seen then we may some of these agencies squirm.
Mike, so that there is no error, let’s allow GE Investor Relations to answer that question. If either my source, which I recall to be an on-line Forbes article, or my memory is wrong, I will humbly apologize! If not, then . . .
These ratings agencies were giving AAA to those sub prime junk packages, so were’s the cred when they downgrade one of the longest standing companies in history – complete bollocks if you ask me!! – Time to turn the lights out on those ratings agencies, no pun intended!!!
Hi R May,
The fact that GE is even brought up in relevant discussions with the likes of "Bear Stearns, Lehmann, Circuit City, GM, Ford, Chrysler, B of A, Citigroup" indicates that something went drastically wrong. We were always told that GE’s business model would keep it from becoming like those types of companies. We were always told that the risk was "controlled." Now we don’t know what to believe and that’s the most frustrating aspect of it all. We still witnessed one of the greatest destructions of shareholder value of all times and, unfortunately, some people had to actually realize that loss. Throw on top of that the dividend decrease (which was a debacle in and of itself) and you lose even more confidence. The last week we saw what some say was a "good rally"; yet, GE the stock is still under $10. That’s pathetic.
Hey Chris, I would be too concerned, so we dont get our dividends so we can go out and buy our hot dogs, GE is cashing up just waiting for the next opportunity, I would have to say that GE is better at finding investment opportunities than most of us. One thing I hope GE gets into is Funds Management, if we survive this thing, which we will, then GE will be hailed, it’ll have a name that says "we survived every financial crisis in our long history" – Compulsory Super will always be with us and financial evolution has paved the way for the survivors to come in and take over – I’m really excited about our (GE) future!!!!
Cashedup,
I’m assuming that when you mention "better at finding investment opportunities than most of us" that you’re ignoring the real-estate investments in Europe the last few years that are now the biggest question marks most analysts have? If they had used the money to pay down debt, invest in the industrial businesses, or dare I say give it to shareholders (i.e. owners), I’m sure there would be a lot less question marks right now in that regard. Heck, they could have just put that money in T-bills and been better off given all the "hype" (good or bad) surrounding those "better investments."
Chris tell me a financial institution that doesnt have European or US property on their books. 1991 same bone, but it was mainly commercial property then, I watched as a bank reported the biggest loss (% of equity wise) in Australian banking history & in its 100+ year history, it came back though. Again, I’ll say it till the cows come home, while everyone on earth is saying money businesses stink, thats the time to go in and buy (Funds Management = GE’s new Money Empire).
Cashedup,
You’re side stepping the point about whether those were "better investments" than other uses of that money (which I suggested). Whether "Mr. Market" is right or wrong, it’s signaling that the money could have been better allocated. You can jump into the fray and buy financials all you want (best time to buy is when they are down) but that doesn’t help those that have witnessed their equity holdings lose 70%+ as well as get their dividend checks cutoff. I have time to wait for my holdings to recover, and you seem like you do to, but many people unfortunately had to actually realize those losses; much of which was caused by "Mr. Market’s" concerns over GE Capital’s allocation of resources. I think some of it was overblown; but, there’s a lot of people that have assessed the situation and they see it differently.
I’d make a good CEO or Politician then!! Dont know why they had to realise the losses unless they are retired and are cashing in because the dividends not providing enough or they are solely relying on GE dividends for a living, I highly doubt it though – if so then they have learnt the first rule of investing "spreading your risk" and thats what GE does, spreads the risk across every sector and thats why it will survive this, the price the stock is at is an overreaction, just like most stocks were overvalued in Oct 2007-we all know that "Mr Market" in times like these runs on emotions – GE’s low price is pure emotion – the governments in all the western economies are pump priming and its the infrastructure businesses (GE in particular) that will benefit – on the equities front – compulsory super will look after this – I tell you now I’m out of cash and overweight in equities as we speak – but I dont expect anyone will listen to me, I’m not from Omaha!!!!