Now that Alcoa is out of the way, the next important data point is our parent network, General Electric, which reports earnings on Friday. Since I'm often asked about the different divisions, here's a breakdown, with 2008 estimated revenues:
(% of 2008 est. revs)
Commercial Finance 19%
Consumer Finance 14%
GE Industrial 10%
NBC Universal 9%
If you're wondering what all these divisions do, here's a primer:
Infrastructure: sells equipment for air transportation, energy generation, rail transports, water treatment.
Commercial Finance: loans and leases on vehicles, corporate aircraft, construction equipment.
Consumer Finance: services to consumers, retailers, auto dealers, and private label credit cards.
Industrials: sells consumer appliances (which is on the block), and industrial equipment.
NBC Universal: theme parks and TV networks.
Healthcare: healthcare equipment, medical diagnostic equipment.
What might the earnings look like? Infrastructure will almost certainly be the highlight—it’s a core competency of the company, and where much of the recent growth has been.
Commercial Finance still looks OK. If there is a weak spot, it is likely Consumer Finance, where the trend is worsening.
But GE’s stock reflects this concern: down 13% in June and is down 25% year-to-date; the S&P is down 14 percent.
What we want to clear up: will 2009 EPS growth be much flatter than the 10% embedded within guidance?
Plusses for GE:
--Dividend yield: 4.5%
--Low multiple: 12x forward earnings
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