GE Sells Biotech Business for $21bn to Danaher

The unit sold was part of GE's healthcare business and was slated for its own IPO later in the year. GE shares were 8% up in early trading.

The deal was positively received by analysts covering both companies.

Gabelli commented that it addresses the deleveraging challenges of GE, allowing it to focus on turning around the power business.

Others described it as "significant down payment" on $30bn of expected cash proceeds highlighted on 4Q. Janney's pointed to an uptick in DHR's organic growth rate going forward from 4% to 6%.

Danaher publishes a sustainability report yearly - the latest is on their website.

Bob Swan Edges in as CEO of Intel in Semi-Con Rat Race

Bob Swan becomes CEO of Intel after seven months as interim CEO. His previous experience includes 15 years at General Electric and later CEO of Foster City-based online grocery business Webvan (which went bust in 2001 and was folded into Amazon.com).

New CEO Larry Culp Cuts GE's Dividend to 1 cent per share

Larry Culp cut GE's dividend to 1 cent per share from its quarterly level of 12c per share, saving GE around $3.9bn a year. Despite the loss of dividend shares rose.

Larry Culp is known for his "hands-on" approach, having cut his teeth from the age of 37 as CEO of Danaher. He has a BA from Washington College and an MBA from Harvard Business School. He is the first outsider to lead GE, ousting former incumbent John Flannery (who was a 30 year veteran of GE taking the reigns from Jeff Immelt). On Larry's appointment, shares surged 10%.

GE's debt, complexity of corporate structure and bad deals have contributed to its troubles. This has wiped off half a trillion dollars of market value over the past 18 years (its market value peaked in 2000). GE Power is one of its worst performing divisions reporting a 33% decline in Q3 sales. Renewable energy generation is taking away some of its business.

A bright spot in GE's business is GE Aviation, where sales have climbed 12%, in which the company builds jet and turboprop engines (engines that drive aircraft propellers). The division also has a Digital subdivision which offers products in the cloud aimed e.g. at aircraft maintenance records (AVRAD).

The Economist's "Jack Welch MBA" - Bad Use of Off Balance Sheet Financing? Pros and Cons? What does off-balance-sheet financing really mean?

The Economist in Jun 09 came out with an article called "The Jack Welch MBA" which describe how a hypothetical MBA program would be run if it was run by Jack Welch (in response to his $12m investment in Chancellor University in Ohio).

Performance Principles/Targets:
1. If a business in a given industry is not first or second, should be sold or closed.
2. Fire the worst performing managers annually (bottom 10%).

More controversial principles, to manipulate the apparent performance/liquidity/financial state etc of the company:
3. Accounting - prolific use of off-balance sheet vehicles
4. Opaque finanical arm, GE Capital, used to top up profits in bad years

Taking a closer look at GE's financing, here...

First, a "Sesame Street" definition of off-balance sheet financing. You want to keep large capital expenditures off the balance sheet, e.g. since you want a low debt/equity ratio.

A lot of Enron's problems were due to off-balance-sheet financing. Enron is worthy of further study. The scandal destroyed accounting firm Arthur Andersen (the firm founded by Arthur Andersen and Clarence DeLany in 1913).

crating(_GECapital, downgrade(_AAA, -4)) :- payout(_GECapital, usd(8bn)) [Fortune, GE10K]

GE has become the economy's bellwether (MARKET THERMOMETER, LEADING SHEEP) company. (p.s. what is the meaning of bellwether - seems this is a term used by a lot of financial analysts and economists. what is the meaning? wiktionary describes bellwether as the leading sheep of a flock, anything that indicates future trends or a stock/bond indicative of the overall temperament of the marketplace). We should pay careful attention to bellwether stocks.

ceo( _GE, X). ? X = "Jeffrey Immelt".
mba(jeffimmelt, hbs).

CD = crating(_GECapital, downgrade(_AAA, -4))

estEarnings( _GE, 2009, X). ? X = usd(12bn).
estEarnings( _GE, 2009, X), CD :- X = usd(4bn).
divfreq( _GE, X). ? X = quarterly.
exchange( _GE, X). ? X = nyse.

business( _GE, X). ? X = selling(Y), servicing(Z), financing(A). Y=advancedGasTurbines, Z=aircraftEngines, A=businesses, A=consumers.

diamond(CD):- reasons(X). ? X=cashflowstress, X=deterioratingAssetquality, X = not(diamond(borrow( _GE, money)))

motto( _GE, X ). ? X = "imagination at work".