Whats Happening At GE
GE theֲ worldג€™s biggest nonbank finance company is seeing their fare share of problems. Profits are faltering forcing the companyֲ last week to reduce its dividend by two-thirds. The question that is being discussed is ifֲ G.E. will retain its triple-A credit rating. GEsֲ ֲ finance arm has brought on tremendous damage to it’s shareholders. Since the beginning of last year, G.E. has lost nearly $300 billion of market value (This is even twice the loss of Citi). There areֲ estimates that GE Capital has unrealized losses of some $21 billion. ֲ According to the accounting methods used by GE they do not need to write down these losses. The question is how canֲ G.E. ֲ find a way to avoid taking huge write-downs while still maintaining its sterling credit rating?
GE shares reached their lowest level ֲ in 16 years yesterday. A vote of confidence was shown by ֲ Immelt and the head of GE Capital, Michaelֲ A. Neal when they purchased shares. Each of them purchased 50,000 shares each. They are now sharing company with the Guru of Omaha, Warren Buffett.
What do you think…
Can GE maintain it’s credit rating?
Was the vote of confidence of Immelt a sign a bottom is in and time to purchase GE?