General Electric (GE)
can be called the world’s ultimate industrial conglomerate. It’s the biggest maker of jet engines, power generation equipment, health-care imaging equipment, and locomotives on the planet.
The company is divided into four units: technology infrastructure, energy infrastructure, home and business services, and capital services. Unlike many conglomerates, GE has put together businesses with strong synergies. The company is very customer-centric and efficient, with a legendary focus on the bottom line.
GE now is making a big play in emerging markets, and some analysts expect the energy infrastructure unit to lead the company’s growth in the next few years.
General Electric has about a 45 percent share of the world’s large gas-turbine market, estimates CEO Jeffrey Immelt. GE should receive a lift in that area from plans by the United States and emerging market countries, such as China, to substitute natural gas plants for coal, he told a recent shareholders meeting.
“There is so much work going on today in China in shale gas,” Immelt said. “I say a prayer every night, ‘Bless my family and find more gas in China.’ Those are my only two prayers.”
GE is shrinking its finance unit, which created huge losses during the financial crisis with its mortgage exposure. GE Capital’s ending net investment, a measure of its assets, has dropped to $452 billion from $550 billion at the end of 2008. The unit will stick its knitting in middle-market commercial and industrial loans, equipment leasing, and a few consumer areas.
GE’s profit jumped 48 percent to $3.3 billion in the third quarter from a year earlier. Revenues were unchanged at $35.4 billion.
Standard & Poor’s analyst Richard Tortoriello has a four-star buy rating on GE shares. “We see two major trends buoying GE's stock price over the next 12 months,” he writes. “The first is our view of continued improvement in credit markets . . . resulting in increased 2012 profitability at GE Capital. The second is our belief that GE's industrial operations will see improvement in longer-cycle businesses.”
The company next reports earnings Jan. 20.
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