GE to sell GETS (GE Transportation GE Rail) to WABTEC

[GEVO]

Monday is the day John Flannery is supposed to outline his plan at the GE Investor Update starting at 9am. I believe he also will be speaking at the UBS Industrials and Transportation Conference on Wednesday. Although GE Transportation is one of the highest margin businesses GE owns, the feeling is that they will let it go. Possibly someone like Komatsu buying the drive motor side, Siemens or Bombardier the rail portion. The other option, probably more likely due to the down market fetching a lower price on a sale, would be a spinoff. That could be good or bad. Just depends on how they structure it. Many companies in trouble often transfer a lot of their debt onto the spinoff which eventually bankrupts them. Has happened to countless spinoffs over the years. Unfortunately seeing how they have run things, I believe the latter is what will happen ending GE Transportation as we know it along with countless employee's lives being forever changed as the ones at the top rake in hundreds of millions.

We shall see the direction they intend on heading very soon. Hoping for the best but expecting the worst.

[Allen Hazen]

Today's (11.xi.2017) Toronto "Globe and Mail" has an article on what is going on at GE. "Cost cutting." Various discretionary things (like the building of the new corporate headquarters in Boston) are being slowed down, and elsewhere there are job cuts. Article particularly mentions the business software unit as letting both sales and engineering employees go, predicts that "Power" (generating plants) will also be heavily affected, jet engines and the medical business perhaps less so.
GE is still talking about selling $20 billion of its assets.
And a representative of Trian (the "activist investors," a.k.a. "corporate raiders") who recently got a seat on the GE board was quoted as saying GE should concentrate on businesses where it is the market leader… to which I have two comments: (1) this is in line with longstanding GE policy (witness businesses that have been sold off over the decades), and (2) Transportation is a market leader if you think of the market as being DIESEL LOCOMOTIVES, but maybe not if you think of it as being RAILWAY ROLLING STOCK, where GE is smaller, I think, than Bombardier, Siemens, or the Chinese companies.

We'll see what gets announced on Monday. (Thanks for the heads-up on that, GEVO!)

[es80ac]

whatever happens to GETS, things are getting ugly for the folks in Erie. GETS was already in the process of shutting down locomotive production in Erie and concentrating in Ft Worth. It will be interesting to see what's happening in Ft Worth after the sale/spin off.

[es80ac]

On the personal side, witnessing the once proud GE Transportation system in Erie PA being reduced to some fire sell asset and likely being whittled down soon after is very painful to me. My dad worked many years over there on the engineering side, GETS was and is a well run operation, everyone really takes pride in their work.

[GEVO]

It was made official this morning. GE to sell or spin-off GETS.

[XC Tower]

Here's hoping that something good comes from this for the Erie plant.












XC

[GEVO]

I hope so too but hard to say at this point. The Erie paper makes it sound as though this is not a done deal, that GE is just considering the move. That is not true. Rafael sent out an email this morning before the big meeting that said GETS will be divested from GE. Basically that they are exploring the best way to go about it. So the employees are still in limbo as to what will happen other than knowing they will no longer work for GE.

It's official: With nearly all operations in Fort Worth, GE plans to exit locomotive manufacturing

[XC Tower]

Hard to imagine no General Electric in Erie, PA.....GE was a reality of growing up here. I worked there in 1977. It was like a city, complete with a narrow-gauge industrial track going into many of the buildings. Building 10, locomotive assembly, was amazing. Building 18 was hopping with the transit cars being built. Yes, GE was a fact of life in the entire area. This is another stark illustration of how life changes, even though we may not think it will.
I just the plant stays in one form or another with another buyer recognizing what the workforce can do. There are a lot of good folks there.









XC

[XC Tower]

Please pardon if I got Building 18 wrong for the transit cars.....(I blame too much information going into my mind, rather than age.)









XC

[Allen Hazen]

Confirming the bad news, the New York Times for 13 November 2017 has a report (byline: Steve Lohr) on (GE CEO) Flannery's speech:

https://www.nytimes.com/2017/11/13/busi ... v=top-news" onclick="window.open(this.href);return false;

(I think non-subcribers are allowed to access a limited number (10?) of NY Times articles each month, so this should be accessible.)

The key thing, for people of our interests, is that the "railroad locomotive" business is mentioned as one of three that will probably be divested. Elsewhere Flannery is quoted as saying that the "railroad equipment" business is "fundamentally strong" … suggesting that the need for money to pay dividends (which are being cut, for now, in a move that GE has usually avoided) is severe enough that GE is cutting muscle as well as fat. People who know more about business and the stock market than I do will probably get something from the parts of the article I haven't mentioned.

[es80ac]

This is another bone head move by GE to shed a strong business like GETS like they did with GE Capital, NBC and GE Appliance. All those move did nothing other than weaken GE in the long term, and they didn't even get their bang for the buck by impressing the wall street sharks that much in the short run. What they should do now is get rid of GE Power which is the cause of all the recent problems.

[Gilbert B Norman]

Lead article in the Journal today:

https://www.wsj.com/articles/general-el ... 1510573283" onclick="window.open(this.href);return false;

Fair Use:

...General Electric Co.’s GE -7.17% new leader outlined a restructuring plan that will slash the annual dividend by $4 billion and streamline the industrial giant’s operations, but warned investors it will take years to fix some of the company’s businesses and for profits to begin to improve.

GE Chief Executive John Flannery lowered earnings targets for 2018 and cautioned that even in 2019 conditions will be difficult, especially in the company’s biggest unit, GE Power. He laid out a future for three core markets—power, aviation and health care—and said the company would look to shed smaller divisions such as transportation and lighting

Volks, this outfit is "in deep (drop your own word in)". It goes far beyond "Jeff's chase plane" or halving the dividend.

disclaimer: author holds long position GE

[Nasadowsk]

I think we're starting to see the decline of GE as a firm, period. My only advice to any holders of their stock - if they start talking about dumping jet engines, sell ASAP....

[es80ac]

I read an article yesterday in which some worthless MBA school arm chair commentator/consultant/charlatan claim what's happening is Jack Welch's fault of all the people. That Jeff Immelt didn't do enough to unwind Jack Welch's legacy by not selling enough of GE fast enough. He also claimed GE's past success was all due to GE Capital.

Well Jeff Immelt made mistake alright, his mistake was listening to these consultant quacks and got rid of all the cash cows and divisions that made GE great. John Flannery is just driving the final nail into the coffine by continuing further down this dead end.

So what's now remaining of GE is just 3 divisions, where the parent company itself now has no breath or the financial strength to really drive things when they go further down hill. What's left to do when all else fails now? Other than to dissolve the last bit remaining of GE? Nobody benefits from all this nonsense spin off, not GE parent company, not GE transportation, certainly not the employees. Only perhaps the "activist investors, aka blood sucking leeches" and the charlant management consultants who has peddled this kind of snake oil to GE management.

[JayBee]

What I have read is that they have virtually no money for R&D and that they will have to borrow $6 billion just to fund the R&D and to pay the reduced dividend. The situation at GE is worse than was known by the market.