GE 3Q numbers

The company is synonymous with Thomas Edison, one of the greatest investors of the 19th century. The man was however funded for his electrical lighting experiments by none other than the Vanderbilt family and JP Morgan (the person, not the company), we have capital to thank for light bulbs, not political parties or organisations. People make things, people take chances on people and humans all win in the end. Of course the light bulb that Edison invented looks very different today, it is all about saving precious resources today. Using less power to make the same lighting choices. In 1896 the company became part of the Dow Jones Industrials index (only 12 in those days), and is the only remaining member. It hasn't always been there, it is however 120 years later, the only company left.

The business looks very different today, even from ten years ago. The company is committed to slimming down the finance arm and continues to divest various assets from GE Capital. Third quarter results released last Friday before the bell, showed that earnings per share from continuing operations were flat, revenues for the quarter clocked an impressive 27.9 billion Dollars, even though that was a slight miss from the estimates. Profits of 4.5 billion Dollars were ahead of the market, margins increased a very pleasing 100 basis points.

There is something coming soon, the company is going to spin off a business called Synchrony Financial from GE Capital, what this will do is make the new GE (post the reduction of the credit business, into the rest of the currently listed Synchrony Financial) not important as a financial institution any more. So what you will now own is unfortunately a few Synchrony Financial shares for the GE shares you own.

The results themselves were not really that exciting, predictably the oil and gas business fell off a cliff, they do like the business long term, and I guess it is close to the Jeff Currie thesis above. An abundance for now, the usage should pick up sharply at the lower prices. Climate change, warmer winters might mean lower energy usage however, at least in the winter to warm up. Perhaps more in the summer to cool down, we could do with some rain over here.

Why own this diversified industrial business with reaches to all four corners of the globe (what is that English lovers? There are no four corners on a globe) that reaches into all aspects of life, travel (aviation), healthcare, oil and gas as we mentioned, water purification, power (gas turbines and the like), lighting and energy management? The stock is cheap, the company is getting leaner and meaner and sweating harder than before. The yield is still over three percent pre tax. There is lots to still like, the company is under-appreciated, perhaps as a result of their heritage and size. We continue to hold the stock for all of the reasons above.