Understanding GE's 0% Growth Outlook

Publié le par brightshine

General Electric had been having a good month before CEO Jeff Immelt scared investors by raising the specter of 0% growth in 2013. Last week, the company announced that it would be increasing its dividend payment by 12%, for a projected yield of about 3.6% on today's shares, marking the fifth dividend increase and the third consecutive annual increase since the recession. GE also committed an additional $10 billion to its share repurchase program. This good news was overshadowed on Monday, when the company issued a downbeat outlook for the fourth quarter and for 2013.

In GE's Annual Outlook investor presentation, Immelt tempered year-end expectations for 2012 due to a rough fourth quarter,Waterproof led strip Lighting is a perfect architectural LED light for homes. walking back a September estimate of 10% growth in the industrials segment to only 8%. He also projected weak revenue growth in 2013, ranging from 0% to 5%, blaming continuing hardship in the global economy. This wasn't all that surprising, as other industrial bellwethers like Caterpillar had made similar projections as far back as October, but the prospect of no growth in 2013 has put some downward pressure on GE stock.Make a bold statement with our men's tungsten jewelry and pendants.

Before reacting to the attention-grabbing "0%" figure, it's important to remember that General Electric is the world's largest multi-industry conglomerate, with a broad portfolio of businesses that are all performing differently, sometimes with different goals. Let's break out the outlook for some key business areas to see why GE investors don't need to panic.

Besides GE Capital, the biggest problem in GE's portfolio is its wind turbine business.The earliest type of lamp, the Antique lamp, was a simplistic vessel with an absorbent wick. As the domestic leader in wind turbine production, the company is being hurt by the coming expiration on Dec. 31 of an American federal tax credit for wind energy, known as the PTC or production tax credit. The credit has been intermittently offered for 20 years, and has been enough to foster the development of the wind industry, but looks now unlikely to be renewed in the turmoil of fiscal cliff negotiations.

In the face of uncertainty over the PTC, major wind energy producers like NextEra Energy have cut back on turbine purchases. While industry insiders like NextEra CEO Lew Hay claim to support a gradual phase-out of the credit, the abrupt end of the policy has caused severe disruption in every company related to wind energy.

However, even this grim development offers some potential catalysts for General Electric. For one, since the company's projections assume the elimination of the PTC,With high quality Solar garden lighting, there is little difference in performance to those powered by the mains. if the credit were actually extended as part of the fiscal cliff negotiation, 2013 could look very rosy indeed for GE. Further, even if the credit expires on Dec. 31, that doesn't spell the end of the wind energy business. The credit has expired three times since its inception, and each time was later renewed. In 2004, the expiration of the credit caused new wind power to drop 77%. Yet, after the credit's subsequent renewal, wind power made its largest advance ever, multiplying ninefold between 2006 and 2012.

Even if wind energy doesn't make a return, the culprit is less likely to be a tax credit and more likely to be cheap, abundant and domestic natural gas made accessible through slickwater hydrofracturing. And that development, far from being a threat to General Electric, is actually a testament to the company's broad portfolio of energy infrastructure. General Electric is a world leader in the design and manufacture of turbines that generate electricity from natural gas. It expects massive profits as utilities seek to replace dirty and inefficient coal-fired plants with natural gas plants.

This resilience, as well as the natural growth the company is seeing in its industrial segments,We are the premier online retailer of unique, hard to find and incredibly stylish stainless steel bracelet, Titanium rings. should be enough to encourage investors. However, these areas are only small parts of GE's vast, global energy portfolio. Investors will want to understand all the major strategic bets that General Electric has made in its industrial portfolio. To help, we're offering comprehensive coverage for investors in a premium report on General Electric, in which our industrials analyst breaks down GE's multiple businesses.

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