Miscellaneous Rumbles

Could this be the end of General Electric (GE)?

1

A friend emailed me this article, and I find it very interesting. Link It seems that GE has been playing a numbers game, since 1995, with 38 billion dollars in fraud being "just the tip of the iceberg".

"Madoff whistleblower Harry Markopolos released a report this morning in which he claims General Electric is “a bigger fraud than Enron.”

"The “individual” making the accusations in this case is the man who undid Bernie Madoff after pointing out irregularities within the Ponzi scheme’s investment strategies".

"Since then, he’s broken up a foreign currency trading scandal at a group of banks – another scheme he unraveled successfully. So, GE’s suggestion that he’s just some guy going around trying to torpedo Fortune 500 companies seems inconsistent at best. Markopolos has a proven track record of being a great financial sleuth, if not the best in the business".

So this doesn't look like its "just some guy" who has an axe to grind with GE. He has a proven track record of investigative research, into several world class schemes. I have a brother who has been working for GE Research and Development, for over 25 years, and I would hate to see GE go down the path of bankruptcy.

2

Worst Case is GE sells off a couple more business units sooner than they might have, and at a discount, then the Cash covers any near-term shortcomings. Shareholders might get another "haircut" beyond what is already priced in. And there is a lot already priced in...

There are plenty of assets...and Larry Culp is the Right Guy to fix it. I was surprised they were able to get him to take the lead.

The GE Board of Directors during the Immelt years are as much the problem as anything else....they were worthless.

I'm vested with GE, and dammit, collecting my $135.07 the 1st of the every Month is as much fun as I could have ever imagined.

3

GE has been slowly unraveling, spinning off units, etc for some time now. Let's all remember kool GE tubes. Also it's said that Mr. Hewlett and Mr. Packard met in GE tube research department.

4

The most damning sentence in the article comes from GE’s response to reports of the allegations:

We remain focused on running our businesses every day, following the strategic path we have laid out.

Or, in plain speak: Oh crap. We gotta put every bookkeeper, accountant, lawyer, and lobbyist we own or can afford on this thing full time, and toot sweet!

5

It'd be fun to be a forensic accountant.

6

I have a good friend who has his own forensic accounting business. Seems to live in a constant world of worry.

Fun? Don't think so. Lucrative? Maybe.

8

Before retirement, I had several "GE" customers over the years.

It can be heaven, and it can be hell.

Their bowls are as big and deep as the governments.

9

The most damning sentence in the article comes from GE’s response to reports of the allegations:

We remain focused on running our businesses every day, following the strategic path we have laid out.

Or, in plain speak: Oh crap. We gotta put every bookkeeper, accountant, lawyer, and lobbyist we own or can afford on this thing full time, and toot sweet!

– Proteus

Add a bit of "Damn the torpedoes! Full speed ahead!"

10

It'd be fun to be a forensic accountant.

– sleepy

I've done some forensic accounting work for an attorney I worked for a few years ago, and while I can't say it was exactly fun (in the same sense that playing music is fun, for example), it WAS very satisfying to uncover the trail of deceit involved in the case ---- and to see the defendants end up paying a hefty settlement rather than try to defend against the incontrovertible evidence we put together had the case gone to trial.

11

GE died when they lost Ronald Reagan as their spokesman.

12

GE died when they lost Ronald Reagan as their spokesman.

– Billy Zoom

I recall that- "Live better, electrically!"

13

GE died when they lost Ronald Reagan as their spokesman.

– Billy Zoom

I do not recall...

14

GE died when they lost Ronald Reagan as their spokesman.

– Billy Zoom

GE died when Jack Welch took over and changed it to a financial services company and private labeler of imported products.

15

Well...according to Wikipedia's summary, GE is still a major producer of aviation power plants (jet engines), is pioneering 3D printing in jet engine manufacture, operates a massive oil-field services company, has a hand in healthcare (imaging hardware, supplies, and data services), still employs 17,000 people in lighting products and services, and builds turbines, generators, and boilers used in a third of the world's power plants - including half the steam turbines in nuclear power plants worldwide.

No doubt manymost of these activities are integrated globally, with manufacturing everywhere - but an awful lot of it is in the US.

Aside from historical legacy, it seems there's more to the company than financial services. It can make a fair claim to being a globally critical infrastructure operation, as well as a significant component of American "defense" (read "military power").

"Financial services" legerdemain (in the ledger domain) and stock market shenanigans have sunk some giant operations, and good riddance to them. But at least from my understanding, there's a lot of baby swimming around in GE's dirty bathwater. I have to assume that whatever transpires in courts of law relative to money and corporate structure (both abstract concepts by comparison to power generation and jet engines), the critical productive components of the company will survive in some form.

16

Well...according to Wikipedia's summary, GE is still a major producer of aviation power plants (jet engines), is pioneering 3D printing in jet engine manufacture, operates a massive oil-field services company, has a hand in healthcare (imaging hardware, supplies, and data services), still employs 17,000 people in lighting products and services, and builds turbines, generators, and boilers used in a third of the world's power plants - including half the steam turbines in nuclear power plants worldwide.

No doubt manymost of these activities are integrated globally, with manufacturing everywhere - but an awful lot of it is in the US.

Aside from historical legacy, it seems there's more to the company than financial services. It can make a fair claim to being a globally critical infrastructure operation, as well as a significant component of American "defense" (read "military power").

"Financial services" legerdemain (in the ledger domain) and stock market shenanigans have sunk some giant operations, and good riddance to them. But at least from my understanding, there's a lot of baby swimming around in GE's dirty bathwater. I have to assume that whatever transpires in courts of law relative to money and corporate structure (both abstract concepts by comparison to power generation and jet engines), the critical productive components of the company will survive in some form.

– Proteus

Yep, and don't forget that GE is a worldwide railroad locomotive manufacturer, along with repairs, rebuilds, and field service.

Another huge market to add to your list.

17

At GE, Progress is our most important product.

18

Kick 'em when they're down...Short Sellers dream situation.

GE is widely held, lots of Mom's and Pop's...nearly 40%.

Easy to scare...most Older.

19

GE will survive. Accounting gymnastics aside, they hold many, many core product lines already mentioned here. Sometimes the big guys get big heads and almost an aggressive, drunken-like disregard for the fundamentals of business. It can eventually get them kicked in the ba**s so they snap out of it and get back to basics. In the end, it's all about making money, right?

20

Billy Zoom, you rock. And, in your spare time, make this place a whole lot fun. Thank you.

21

I work for Schneider Electric...GE is one of our biggest competitors (along with Siemon, ABB, et al.).

Every large electrical firm has a product that will keep them afloat.

We all buy/sell to and from each other.

GE will outlast all of us, if they don't get the proverbial offer they can't refuse and sell out. But I don't see that happening.


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