Skeeter,
RE-- GE's earning growth
this is from Barron's.
In 1997, pension income chipped in $331 million of GE's total earnings of $8.2 billion. In 1998, pension income accounted for $1.01 billion of the company's total earnings of $9.3 billion.
Okay, let's suppose that there was no contribution to earnings in either year (these are not, in any case, actual cash additions). Minus the noncash contributions from the pension plans, GE's '97 net was $7.9 billion; its '98 net amounted to $8.3 billion.
On that basis, the rise in earnings last year was roughly $400 million, or about 5.1%. And 5.1%, while respectable, is a good cut below the 13% the company triumphantly reported.
GE's shares, as we observed, are selling at some 40 times last year's earnings. Which is undeniably rich, but not unduly outrageous in this euphoric market, given the company's many admirable qualities, not least of which has been its ability to deliver 13% growth in earnings.
But that's the point: What kind of a multiple, our friend muses, would GE get for earnings growth of 5%, as it would have had to report last year, except for the help from pension income?
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