> If one replaces the $15 billion interest expense with $5 billion...
As long as you're making up impossible scenarios, where GE Capital's cost of doing business can be reduced by 2/3 without reducing its revenue stream, I have an even better one for you. If one replaces GE's bottom line with a larger number, then shareholders will benefit! GE is clearly robbing its shareholders by not delivering larger profits! Why don't they just make more money??
In my example, CP Industrial is doing the best it can do as a separate entity, and somehow manages to not be distracted by the mere existence of CP Financial. Can it do $14 in revenue on expenses of $11? Apparently not, or it would be doing so: the existence of CP Financial has no impact on CP Industrial's business (if anything it should help, as a source of cheap capital). And who needs CP Financial? I do, since $1 is $1, and if CP Financial throws off $1 in income, I like that. Think of it as just a black box that prints money. Wouldn't you be better off if you had one of those?
I apologize if my gentle chide offended you. I would have no complaint if you said you don't like GE's business model, or don't think they are a good "value" investment at current prices. But the basis of your debt argument is absurd, it makes you look silly, and it is hard to take any of your prognostications seriously when you can make such a fundamental error and stubbornly refuse to admit to it. |
