GE Tumbles After Massive Finance-Arm Charge

Having enjoyed a phoenix-like renaissance in 2018 so far, GE is tumbling in the pre-market, erasing 2018 gains, following reports that the company will record an after-tax charge of $6.2 billion in its fourth quarter results as part of an ongoing review of its finance arm’s insurance portfolio.

Additionally, as WSJ reports, GE will have to set aside $15 billion over seven years to bolster insurance reserves at its GE Capital unit, surprising investors with deeper than expected problems in a business many thought the company had left behind.

The upshot is that the GE Capital unit, which had been paying dividends in recent years to the parent company, won’t pay dividends to GE for the foreseeable future. GE had suspended the GE Capital dividend last year and slashed its payout to shareholders by half.

Shareholders are not impressed...

https://www.zerohedge.com/sites/default/files/inline-images/20180116_GE.png

GE’s looming charge is one of the biggest yet in a corner of the insurance industry that has reeled from pricing miscalculations made decades ago.

Chief Executive John Flannery expressed frustration at the review’s results while saying the actions will restore GE Capital ratios to appropriate levels.

“At a time when we are moving forward as a company, a charge of this magnitude from a legacy insurance portfolio in runoff for more than a decade is deeply disappointing,” he said.

Probably not as frustrated as the shareholders.

Comments

Branded NoDebt Tue, 01/16/2018 - 11:21 Permalink

Immelt only wallowed in effluent, Welch was the brains putting it in the shitter.

GE is a proven training ground with a track record of success in sending forth into the world executive 'top talent' trained in the sacred mysteries of looting companies for the personal gain of a select few.

In reply to by NoDebt

Vardaman Tue, 01/16/2018 - 08:17 Permalink

Obutthole lover Jeffy Immelt hosed GE so badly only a corporate breakup will salvage anything. Look for similar results wherever a CEO nose was up Bath House Barry's butt. 

spastic_colon Tue, 01/16/2018 - 08:18 Permalink

yes but citi is up after they decided to NOT include a 19B charge......glad to see earnings reports are not being gamed again /s.............how come they get a free pass?

NoDebt Tue, 01/16/2018 - 08:20 Permalink

God, could you imagine if all these financial companies (and, yeah, GE is a sizable financial company thanks to their little bastard child, GE Capital) had to suddenly account for all the bad debts and fuck-ups they have neatly ignored or poofed off balance sheet since the financial crisis?  

 

Dilluminati Tue, 01/16/2018 - 08:31 Permalink

There are some people here today pimping Chicom currency as if there was transparency there.. at least GE admits they did turd business... I took a dump on the side of the highway in China and used their currency as TP, on my return trip some farmer gathered the poo for fertilizer and left the TP.

two hoots Tue, 01/16/2018 - 08:35 Permalink

Take heed Ryan/McConnell.  GE is proof debt has limits.  Do not put the US further in this situation.   Better if we start taking our medicine now.  

two hoots Tue, 01/16/2018 - 08:46 Permalink

GE is the poster child of everything wrong with debt, power, gov insider, ego, narcissism, politician emulation, poor government, poor leaders, broken overwatch, lobby, everything since Clinton > Now,   bla, bla. The US in microcosm.

dunce Tue, 01/16/2018 - 09:23 Permalink

Look up the history of how many times GE has paid massive fines for cheating the government. It is a long shameful list spread over many years. It is little surprise the they moved into financial engineering where corruption is the main game and away from hard goods manufacturing.

Davidduke2000 Tue, 01/16/2018 - 09:31 Permalink

Ge had to finance its aircraft engines to sell them today it is paying the price for this crazy scheme. UTX must be laughing all the way to the bank.

Looks like GE will have no choice to file for bankruptcy to shed all these liabilities.

Zorba's idea Tue, 01/16/2018 - 11:22 Permalink

Ha! All of GE's "Sigma 6ers" can't fix all the stupid debt management gymnastics Welch and Immelt performed. Best GE slogan for its workforce a couple years ago..."GE and me, we're all in!" I shit you not :/

Pissedman Tue, 01/16/2018 - 13:40 Permalink

GE needs a turnaround leader like Lou Gerstner at IBM. The attitude adjustment may be too big to succeed, and it will take a leader from outside to make it happen as the insiders are in the GE echo chamber and cannot see from the stupidity from the outside. Welch rode a market wave and made some seriously poor moves when it really didn't count as they could hide things at the time. Immelt spent the company gold on stock buybacks, exhausting the bank account for his golden parachute. Rampant nepotism, promotion based on identity politics and board members from cosmetic companies is no way to be a leader. I fear that Political correctness will take this company down the s...hole. Look at GE's news releases, they will hire thousands of women engineers to "balance" things out, if you are a male engineer, need not apply! They have been putting bean counters in leadership positions to tighten things down, this is the non-innovative approach and nearly always results in failure! Non technical people leading technical companies ALWAYS fails BIG. Political correctness run amok, no innovation, always a me-too company, non competitor for the lead position, why would any customer or stock holder trust in GE's future? Maybe its a gamble play to get it at an all time low?

If GE wants to succeed it needs to rethink and completely rebuild from the ground up and top down. Look up Simon Sinek's talk to see what type of people work for at GE, are they excited and empowered or are they salary sitters? read Lou's Book, elephants can learn to dance...this will take a major upheaval and focus on customer and innovation to win with both.