Summary
Significant pension deficit and future expectation of capital contributions to defined benefit plans.
Debt servicing largely visible from portfolios sales in GE Capital and divestments of industrial units.
Fair value ~10% higher than current share price with possible short term negative triggers (e.g. dividend cut, goodwill write-off, slower equipment sales) holding back price recovery.
Success of long-term turnaround story may be improved by bringing a cornerstone investor on board to avoid short-term pressure as a result of limited financial flexibility.
General Electric (NYSE:GE) as you may have noticed is at a turning point. An orchestrated self-implosion with spin-offs, divestments and extended liquidity lines being the metaphorical meteorites. After the intergalactic forces have ebbed away, a new GE will emerge. Time will tell its fortunes. In this article, I will give my proverbial 2 cents on some of GE’s current issues (pensions, debt and liquidity), give some recommendations on future portfolio actions, put forward a new thought, and provide an indicative valuation of GE.
