The Many Facets of General Electric’s Business

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Jan. 17 (Bloomberg) -- Howard Ward, chief investment officer at Gamco Investors, discusses the business of General Electric as it releases fourth-quarter results on Bloomberg Television’s “Bloomberg Surveillance.”

Bolt on financial?

With a boat on -- with a bolt on financial and a bolt on health care.

It's not a really apples to apples industrial icon he well -- industrial like a honeywell.

Energy has become a big part of their business.

So it is a bit of its own hybrid.

John rice runs the international shop for immelt.

Is this a global company masquerading with any -- with a mailbox in the united states?

It is a company with tremendous global reach.

In the old days, g was -- ge was considered a gdp stock.

They may fast be a company growing with gdp.

Organic revenue growth is what they're try to capture.

Something in the 4% to 7% range.

Aviation, power, water.

Jeff immelt saying that we ended the year with great strength.

He's not going to come out and say -- he's not going to come out and say, well, that sucked.

Earnings-per-share at every company -- you have to look past that -- but g is said to be one of the more transparent companies.

They work very closely with analysts.

As an investor, do you feel like you really know ge and what is going on?

I would not put to ge under the category of being one of the most transparent companies when you come down to the granular level on the division-by division basis.

I think they've improved on that in recent years.

But if you are back 10 years ago, it was regarded more of a black box.

Certainly the financial services side.

Which was nearly 50% of their earnings back then.

Ge capital makes up about 32% of operating income.

What is interesting here in this earnings report, ge capital and ge aviation had operating profits that beat analyst estimates.

But the industrial segment, power, water, oil and gas, energy management all coming in later than anticipated.

This is creating a competition where capital keeps beating on assessments and the industrial side does not come up with enough.

But again, part of that is energy management, oil and gas business which they have that is a little but separate from their true industrial businesses.

But i do hope that ge stays course with this program they have had in recent years of trimming down ge capital, reducing the contribution of ge capital to the total.

That is what the street was them to do.

They will have a higher multiple earnings if they continue.

Given all the different settings -- sectors you are looking at, what are you making your decision on?

That is a good question.

You can argue that, if you want an energy company, by energy game if you want an industrial company, by industrial.

If you buy an industrial conglomerate, there is some safety and that in terms of smoothing out earnings over a business cycle.

But it is a pretty unexciting enterprise.

That is the old at&t they you putting grandma sportfolio?

Sort of.

Provided they continue to work down the exposure of ge capital to the total because that presents a financial risk.

Unexciting enterprise come is that enough to get people excited and 2014? i think ge is a solid investment.

I don't own it in my growth fund.

We own shares in some of our other funds.

But you have the three percent plus dividend yield that was raised just last month.

You have tremendous cash flow, share buybacks taking place.

If you can get 5%, 6%, 7% earnings growth, it will probably be the market.

Richard falkenrath, how do big companies fold in to our international expression and expansion given the challenges we have on security?

They generally avoid this topic.

There is a little bit by sector, but this is an uncomfortable area.

They have to be affected by what the president has to say today.

It is so diversified and so broad.

Frankly, they will see depressed demand due to the fact that they are seen to be corporative with the u.s. government on spying.

This is a real competitive issue, particularly with china.

U.s. versus france, taking china from coal, u.s. versus france is important.

Sure, if you are running a ge this -- ag these days, you have to be a bit of a diplomat.

It came in premature as intended.

They are up 1.5% in the premarket trading.

So some it is he hasn't, but not a whole lot.

We will take a look at the link between fed tapering and

This text has been automatically generated. It may not be 100% accurate.

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