Firstly, let me confirm that I informed bruces2006 of the "Value Investing" web site.
He has recently embarked on another modus operandi with regard to analysing stocks, and as such, he is still getting acquainted with, and building up experience in that regard.
However, I’m not writing this, in any way, on his behalf. I’m sure he’s more than capable of speaking for himself.
The reason I saw fit to comment here, is because he used a Spreadsheet that I supplied him with, that downloads financial data and performs necessary analysis. Needless to say, such a method relies on data being in the same format whenever it’s downloaded from the web site.
Unfortunately, in GE’s latest set of Quarterly Results, presented in the web site that I normally use, the numbers for "Cost of Sales" and "Long Term Debt" were "consolidated" and were therefore out of step from previous reporting.
"Cost of Sales" was reported as the sum of "SG&A" and "CoS", and "Long Term Debt" was zeroed and was all incorporated in "Short Term Debt".
Being relatively new to the spreadsheet, I suspect that bruces2006 was not immediately aware of these new "anomalies".
Notwithstanding all of the above, I would agree with him with regard to GE’s current, general state of financial affairs.
As I see it, GE has far too much Long Term Debt.
From Yahoo’s site we see that GE sits with well over $222bil. of Long Term Debt, while its TOTAL Stockholder’s Equity sits at less than HALF of that, at about $108bil.!!
Who owns this company ? Is it the Shareholders or the Banks (Lenders) ?
However, IMO, what’s worse is the effect that this Debt is having on GE’s Income Statement. In its latest Quarterly we see pre-tax Interest Expense at $4533mil.
Based on its tax rate of about 18% this becomes about $3720mil., post tax.
That’s about 76% of its Quarterly’s Bottom Line !!
I suggest that the "6.7B" that C.Worth refers to is really "peanuts" when one puts it into the context of GE’s Debt.
Of course, one doesn’t expect a company such as GE to have no Long Term Loans. But even if it managed to reduce its debt by some 30% to 50%, that would certainly put more Dividend into the pockets of Shareholders.
That, IMO, is what one could regard as a positive step in improving that "business plan" that C.Worth refers to.
After all, one has seen GE’s stock price move sideways to downwards since the end of 2004. It seems informed investors are not as enthusiastic about GE as they have been about HANS, whose stock price has increased over 8 fold in that time.
Let's hope that Jeff Immelt's new "Initiatives" really do show up on GE's future Income Statements !
In closing, let me say that it’s a pity that certain individuals on this Board cannot bring themselves to extend a reasonable welcome to a new contributor. They prefer, it seems, to display an apparent lack of courtesy. |
