Economy After 110 years, ailing G.E is booted from the elite Dow Jones Industrial Average

[Arkain2K]

General Electric gets booted from the Dow Industrial Average, will be replaced by Walgreens
By Matt Egan June 19, 2018

For the first time in 110 years, General Electric will not be a member of the elite Dow Jones Industrial Average.

S&P Dow Jones Indices announced on Tuesday that the iconic maker of light bulbs and jet engines will be replaced in the 30-stock index by Walgreens Boots Alliance.

GE (GE) was an original member of the Dow in 1896 and has been in it continuously since November 7, 1907.

Being ousted from the Dow is the latest indignity for GE, which is dealing with a serious cash crisis caused by years of bad deals. GE has replaced its CEO, slashed thousands of jobs and cut its coveted stock dividend in half.

Last year, GE was the worst-performing stock in the Dow, losing almost half of its value. GE is down by another 25% this year.

"We are focused on executing against the plan we've laid out to improve GE's performance," a GE spokeswoman said in a statement. "Today's announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE."

To pay down a mountain of debt, GE is selling off long-held businesses. Last month, GE agreed to sell its century-old railroad division. GE is also searching for a buyer for its struggling light bulb division.

GE's stock plunge helped lead to its exit from the Dow. That's because the Dow is price-weighted, meaning that GE's $13 price tag had little impact on the index. S&P noted that GE had a weight of less than half a percentage point.

David Blitzer, chairman of S&P's index committee, noted that industrial companies like GE are no longer as prominent in the American economy. Banks, healthcare, tech and consumer companies play a larger role today.

"Today's change to the DJIA will make the index a better measure of the economy and the stock market," Blitzer said.

S&P said GE will be replaced by Walgreens(WBA) on June 26.

It's the first shake-up to the prestigious Dow since 2015, when Apple (AAPL)replaced AT&T. (T) (CNN is now owned by AT&T).

The committee that runs the Dow prefers no more than a 10-to-1 ratio between the high and low stocks in the index. Yet the gap between GE and Boeing (BA) has soared to more than twice that today.

GE shares dipped another 2% in after-hours trading on Tuesday.

http://money.cnn.com/2018/06/19/investing/ge-dow-jones-walgreens/index.html

 

[Arkain2K]

 

[Arkain2K]

 

[Liquid Smoke]

Proof that no matter how big you are it can all come crashing down. The googles and facebooks of the world would be wise to pay attention...

 

[Falsedawn]

Proof that no matter how big you are it can all come crashing down. The googles and facebooks of the world would be wise to pay attention...

I'm pretty sure they'd be happy with coming down in 100 years. I'd be pretty happy.

 

[Liquid Smoke]

I'm pretty sure they'd be happy with coming down in 100 years. I'd be pretty happy.

It would be quite a run if they lasted that long.

 

[Cubo de Sangre]

Last year, GE was the worst-performing stock in the Dow, losing almost half of its value. GE is down by another 25% this year.

 

[wlu.29]

Cant wait till canopy is the first marijuana stock on the industrial average

 

[Arkain2K]

GE's latest sale: Its 111-year-old rail business
by Matt Egan | May 21, 2018

​

General Electric is giving up full control of its century-old rail division as the conglomerate's empire continues to shrink.

GE (GE), an early pioneer of the locomotive industry, agreed on Monday to merge the struggling rail business with rival Wabtech (WAB) in an $11 billion deal.

The transaction will raise $2.9 billion for cash-strapped GE, which has promised to sell off various businesses to pay down debt and stabilize its balance sheet.

GE had owned the rail business, now known as GE Transportation, since 1907 and eventually turned it into one of the largest makers of freight locomotives in North America. Besides making trains, the business and its 9,000 workers also manufacture mining equipment and marine motors.

Under the terms of the deal, GE will receive a 9.9% stake in the combined company and GE shareholders will own about 40.2%. GE will be required to unload its stake within three years, making an exit from the rail business.

GE's rail business was booming in 2014 thanks in part to high prices for metals and oil. However, the industry hit a snag in recent years as commodities slumped, leading GE to decide to back away.

"It's a depressed market. It will probably be a long cycle before it gets better," said Gautam Khanna, an analyst at Cowen.

By joining forces, the companies say they will be better positioned to emerge stronger from the industry wide slump. The new company will generate about $8 billion in revenue, have around 27,000 employees and be a leader in major freight rail and transit markets around the world.

GE and Wabtech predict the deal will create about $250 million in annual cost-savings as well as other financial benefits. The companies said the tax-free deal is expected to close in early 2019, pending regulatory and other approvals.

Wabtech, formerly known as Westinghouse Air Brake Technologies, is celebrating its 150th anniversary in 2019.

The deal comes as GE is racing to stop a cash crisis that caused its stock to plunge 45% last year. That's prompted speculation that the storied company could get kicked out of the Dow. GE cut its dividend in half and announced plans to lay off 12,000 workers in its beleaguered power division late last year.

In an effort to raise cash, GE has promised to sell off about $20 billion worth of businesses, including its iconic light bulb unit. GE has even signaled a willingness to consider an outright break-up of the conglomerate.

Over the past 15 years, GE has also sold off NBC Universal, its appliance business and most of GE Capital, the massive financial arm that nearly killed the company during the financial crisis.

While GE's empire has shrunk, its total debt has nearly tripled since 2013, according to Moody's. That includes a massive pension shortfall of $28.7 billion, the highest in the S&P 500.

GE's rail deal will not help its pension problem. Even though GE is selling the rail business, the US pension and retiree health liabilities will not transfer to the new company, a person familiar with the matter told CNNMoney.

Even after the rail deal, GE will continue to make everything from MRI machines and power plants to jet engines.

GE shares, which have tumbled 12% this year, rose about 3% on Monday.

http://money.cnn.com/2018/05/21/news/companies/ge-rail-transportation-deal-wabtec/index.html?iid=EL

 

[VivaRevolution]

If they weren't selling off business, I would be interested at buying at 13$ a share.

Their management model is shit, and it hurts the Boeing company everyday they use it as well. Managers are not interchangable. When you require no subject matter knowledge, and rely on pure analytics, you have created a plan to fail.

 

[second sight]

Be interesting to see what role windfarms played

 

[HeLLMuTT]

Cant wait till canopy is the first marijuana stock on the industrial average

Your wait ended a couple weeks ago... But they were second to another Canadian cannabis company that popped up in Feb.

https://www.investors.com/news/marijuana-stocks-canopy-growth-cannabis-pure-play-nyse-debut/

 

[Arkain2K]

Your wait ended a couple weeks ago... But they were second to another Canadian cannabis company that popped up in Feb.

https://www.investors.com/news/marijuana-stocks-canopy-growth-cannabis-pure-play-nyse-debut/

Erm, I think you're confusing the Dow Jones Industrial Average index with a stock exchange like the NYSE.

https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

 

[HeLLMuTT]

Erm, I think you're confusing the Dow Jones Industrial Average index with a stock exchange like the NYSE.

https://en.wikipedia.org/wiki/Dow_Jones_Industrial_Average

I am, forgive me... You see the weed I smoke.

This industry is going to be a monster.

 

[HockeyBjj]

I worked for GE Aviation for a brief time. The part I was in seemed they liked the idea of what they were doing better than the money making product they were actually producing

 

[Phr3121]

For the first time in 110 years, General Electric will not be a member of the elite Dow Jones Industrial Average.

Yeah, that is really sad. They stopped making light bulbs last year. GE is going the way of Kodak which was also a great company with a great history. Kodak is still alive, but just barely. I'm, sorry to see iconic companies disappear. RadioShack is another company that comes to mind. I used to love the store as a kid. Anyone over 40 had a special relation, and memories, with these companies.

 

[Arkain2K]

Yeah, that is really sad. They stopped making light bulbs last year. GE is going the way of Kodak which was also a great company with a great history. Kodak is still alive, but just barely. I'm, sorry to see iconic companies disappear. RadioShack is another company that comes to mind. I used to love the store as a kid. Anyone over 40 had a special relation, and memories, with these companies.

The slow death of Dupont was one of the saddest stories of all, consider all the innovations accomplished there.

http://forums.sherdog.com/threads/the-death-of-dupont.3165193/

 

[Phr3121]

The slow death of Dupont is the saddest of them all :-(

DuPont is still alive, but nothing like what it used to be. Other iconic companies that have disappeared: Circuit City, Pan Am, Blockbuster, and Polaroid. Fond memories of all four.

 

[Arkain2K]

Worst isn't over for General Electric, predicts ex-GE transportation CEO
By Michelle Fox​

Former General Electric transportation CEO Bob Nardelli told CNBC on Tuesday he thinks there is more pain ahead for his former company.

The industrial giant, which is in the middle of a massive restructuring, was booted out of the Dow Jones industrial average on Tuesday. The change will occur prior to the open on Tuesday, June 26.

Nardelli said it is a "sad day" but acknowledged GE was weighting the Dow down. It was one of the original components of the blue-chip index.

"[CEO] John Flannery has his work cut out for him. He's been there a year now, and I think time is not a friend when you're dealing with the challenges that he's facing," he said on "Fast Money."

"I don't think the worst is over," added Nardelli, who is also the former CEO of Chrysler and Home Depot.

GE was the worst performing stock in the Dow, falling more than 55 percent over the last 12 months. It lost more than 25 percent this year alone.

Flannery is trying to engineer a turnaround for the multinational conglomerate, which includes the sale or spinoff of parts of the company's portfolio.

The CEO "mentioned he's got $20 billion of assets that he has to monetize. And quite honestly, they've had a little bit of a slow start in doing that," Nardelli pointed out.

In May, GE said it was selling its transportation business to Wabtec. However, Nardelli said that won't be realized until 2019, at least from a cash-flow standpoint.

"They've got to move more quickly … monetizing non-earning assets, getting rid of some of the $20 billion worth of assets that he's identified."

https://www.cnbc.com/2018/06/19/wor...ectric-predicts-ex-ge-transportation-ceo.html

 

[bobgeese]

The last time the market crashed I made a decent bit on GE.

Is there a price you guys would buy in at?