G.E Case Study and Charting Assignment

8/13/2019 G.E Case Study and Charting Assignment

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Fall 2013

G.E. Case Study and Charting Assignment

Due Tuesday Novemer 1!th

" #ee$ %12

RUID: 145006622

NAME: Pramod Bharadwaj

Corporate H!tor":


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The birth of the incandescent light bulb in 1876 from the laboratory of Thomas Edison, aninventor from Ohio, prompted him to further study in the field of electronics. By 18!, Edisonhad amassed all his businesses and organi"ed them to form the Edison #eneral Electric$ompany. %rior to Edison&s company ho'ever, Elihu Thomson and Ed'in (. )ouston hadalready formed the Thomson*)ouston Electric $ompany in 187. Both companies became

dominant in the field of electrical industry. )o'ever, as their businesses gre', it becameincreasingly difficult to create electrical devices that depended solely on their o'n technologies.

By 18+, these companies oined in a merger prepared by financier (.%. -organ, to establish the#eneral Electric $ompany. ts head/uarters 'as stationed in 0chenectady, e' 2or3.

#eneral Electric 'as one of the original 1+ companies included in the then ne'ly*formed 4o'(ones ndustrial 5verage and has remained in the list until no'.

#eneral Electric also 'ent beyond electronics and pursued investments in media broadcastingand aviation. n 11, #E founded adio $orporation of 5merica to epand their ventures in theinternational radio industry. #E also endeavoured in television ventures by reac/uiring $5 for

B$ in 186. The company also purchased ivendi&s movies and television franchises in +!!9.#E 'as also involved in the development of :0 aviation by creating the first :0 et engine in19+. #E 5viation is no' part of #E nfrastructure, a subsidiary of #eneral Electric.

Different areas of business:

#E is a diversified infrastructure and financial services company. ts products and servicesinclude aircraft engines, po'er generation, 'ater processing, security technology, medicalimaging, business and consumer financing and industrial products. The company servescustomers in more than 1!! countries. t has +;+ manufacturing plants located in ;8 states in the:0 and %uerto ico and about +8; manufacturing plants located in 9+ other countries.The company operates through eight business segments< #E $apital, po'er and 'ater, aviation,

healthcare, oil and gas, home and business solutions, energy management and transportation. The#E $apital segment offers a broad range of financial products and services 'orld'ide. tsservices include commercial loans and leases, fleet management, financial programs, homeloans, credit cards, personal loans and other financial services. 4uring =2+!1+, #E $apitalprovided approimately >1!7 billion of ne' financings in the :0 to various companies,infrastructure proects and municipalities. This segment operates through various product linesincluding< commercial lending and leasing ?$@@A, consumer, real estate, energy financialservices, and #E capital aviation services.

The $@@ products include loans, leases and other financial services to customers, includingmanufacturers, distributors and end*users for various e/uipment and maor capital assets. These

assets include industrial*related facilities and e/uipment vehicles corporate aircraft ande/uipment used in several industries, including the construction, manufacturing, transportation,media, communications, entertainment and healthcare industries. The consumer product lineoffers a range of financial products including< private*label credit cards personal loans ban3cards auto loans and leases mortgages debt consolidation home e/uity loans deposits andother savings products and small and medium enterprise lending on a global basis.


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The real estate business offers a range of capital and investment solutions and finances. Theseinclude both e/uity and loan structures for ac/uisition, refinancing and renovation of officebuildings, apartment buildings, retail facilities, hotels, par3ing facilities and industrial properties.The energy financial services offer structured e/uity, debt, leasing, partnership financing, proectfinance and broad*based commercial finance to the global energy industry. #E $apital 5viation

0ervices provides financial products to airlines, aircraft operators, o'ners, lenders and investors.These products include leases, and secured loans on commercial passenger aircraft, freightersand regional ets engine leasing and financing services aircraft parts solutions and airporte/uity and debt financing. The po'er and 'ater business segment covers po'er plant productsand services, including design, installation, operation and maintenance services. The segmentprimarily sells gas, steam and aero derivative turbines, generators, combined cycle systems,controls and related services, including total asset optimi"ation solutions, e/uipment upgradesand long*term maintenance service agreements to po'er generation and various other industrialcustomers. The company&s rene'able energy solutions include 'ind turbines and solartechnology. ts 'ater treatment services and e/uipment include specialty chemical treatmentprograms, 'ater purification e/uipment, mobile treatment systems and desalination processes.

#E&s aviation segment offers products and services for the airframe manufacturers, airlines and#overnment agencies. t offers et engines, aerospace systems and e/uipment, replacement partsand repair and maintenance services for all categories of commercial aircraft for a range ofmilitary aircraft, including fighters, bombers, tan3ers and helicopters for marine applicationsand for eecutive and regional aircraft.The healthcare segment provides medical imaging and information technologies, medicaldiagnostics, patient monitoring systems, disease research, drug discovery and biopharmaceuticalmanufacturing technologies. The products include diagnostic imaging systems such as magneticresonance, computed tomography and positron emission tomography ?%ETA scanners, C*ray,nuclear imaging, digital mammography, and molecular imaging technologies. n addition, thesegment offers technologies 'hich include patient and resident monitoring, diagnosticcardiology, ultrasound, bone densitometry, anaesthesiology and oygen therapy, and neonataland critical care devices. The medical diagnostics and life sciences products include diagnosticimaging agents used in medical scanning procedures, drug discovery, biopharmaceuticalmanufacturing and purification, and tools for protein and cellular analysis for pharmaceutical andacademic research, including eisting and a pipeline of precision molecular diagnostics indevelopment for neurology, cardiology and oncology applications.The oil and gas segment supplies mission critical e/uipment for the global oil and gas industry.The e/uipment are used in applications covering the entire value chain from drilling andcompletion through production, li/uefied natural gas ?@#A and pipeline compression, pipelineinspection, and including do'nstream processing in refineries and petrochemical plants. Thesegment also designs and manufactures surface and subsea drilling and production systems,e/uipment for floating production platforms, compressors, turbines, turbo epanders, highpressure reactors, industrial po'er generation and a 'ide portfolio of auiliary e/uipment.The home and business solutions segment offers maor appliances and related services forproducts such as refrigerators, free"ers, electric and gas ranges, coo3tops, dish'ashers, clothes'ashers and dryers, micro'ave ovens, room air conditioners, residential 'ater systems forfiltration, softening and heating, and hybrid 'ater heaters. n addition, the company alsomanufactures certain products and also source finished product and component parts from third*party global manufacturers. These products are distributed both to retail outlets and direct to


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consumers, primarily for the replacement mar3et, and to building contractors and distributors forne' installations. The company also manufacture, source and sell a variety of lamp products forcommercial, industrial and consumer mar3ets, including full lines of incandescent, halogen,fluorescent, high*intensity discharge, and light * emitting diode, automotive and miniatureproducts. The products and services are sold in orth 5merica and in global mar3ets under

various #E and private label brands including #E -onogram, #E %rofile, #E, )otpoint and #E$afe.The energy management segment is #E&s electrification business. The segment designstechnology solutions for the delivery, management, conversion and optimi"ation of electricalpo'er for customers across range of energy*intensive industries. t manufactures electricaldistribution and control products, lighting and po'er panels, s'itchgear and circuit brea3ers thatare used to distribute and manage po'er in a variety of residential, commercial, consumer andindustrial applications. n addition, the segment also provides plant automation hard'are,soft'are and embedded computing systems including controllers, embedded systems, advancedsoft'are, motion control, operator interfaces and industrial computers.#E&s transportation segment is a global technology supplier to the railroad, mining, marine and

4rilling industries. #E provides freight and passenger locomotives, diesel engines for rail,marine and stationary po'er applications, rail'ay signalling and communications systems,underground mining e/uipment, motori"ed drive systems for mining truc3s, energy storagesystems, information technology solutions and replacement parts and other value added services.n addition, it manufactures high*horsepo'er diesel*electric locomotives, including theEvolution 0eries. t also offer drive technology solutions to the mining, transit, marine andstationary, and drilling industries.

SWOT ANALYSIS#eneral Electric ?#EA is a diversified industrial corporation. 5 broad product portfolio andrevenue stream reduces the business ris3s and provide cross selling opportunities, 'hich in turn

enables the company to tap opportunities in ne' as 'ell as eisting mar3ets. )o'ever,challenging macroeconomic and political environment in the :0 and Europe could impact #E&ssales volume and overall business gro'th in the short term.

Strengths4iversified product portfolio and revenue stream provides cross selling opportunities #E is oneof the largest and most diversified infrastructure and financial services corporations in the 'orld.The company is 'ell diversified both in terms of business operations and end mar3ets that itserves. t operates through eight business segments< #E $apital, po'er and 'ater, aviation,healthcare, oil and gas, home and business solutions, energy management and transportation. The#E $apital segment offers a range of financial products and services, including commercial

loans and leases, fleet management, financial programs, home loans, credit cards, personal loansand other financial services. The po'er and 'ater business segment covers po'er plant productsand services, including design, installation, operation and maintenance services. The aviationsegment offers products and services for the airframe manufacturers, airlines and governmentagencies. =urthermore, the healthcare business segment provides medical imaging andinformation technologies, medical diagnostics, patient monitoring systems, disease research,drug discovery and biopharmaceutical manufacturing technologies. 0imilarly, the oil and gassegment deliveries mission critical e/uipment for the global oil and gas industry. 5dditionally,


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#E&s home and business solutions products are comprised of maor appliances and relatedservices for products such as refrigerators, free"ers, electric and gas ranges. 5lso, #E operatesenergy management. The segment designs technology solutions for the delivery, management,conversion and optimi"ation of electrical po'er. #E&s transportation segment is a supplier to therailroad, mining, marine and drilling industries. n addition to the diversified product portfolio,

the company has developed a balanced revenue stream. =or instance in =2+!1+, #E $apital, thecompanyDs largest business segment, accounted for ;1 of the total revenues, follo'ed by po'erand 'ater ?18.7A, aviation ?1;.;A, healthcare ?1+.6A, oil and gas ?1!.;A, home andbusiness solutions ?F.FA, energy management ?9.8A and transportation ?;.A. Thus, broadproduct portfolio and revenue stream reduces the business ris3s and provide cross sellingopportunities, 'hich in turn enables the company to tap opportunities in ne' as 'ell as eistingmar3ets. n addition, it also helps the company to balance revenues in the face of a slo'do'n ina particular segment.

Successful inorganic growth strategy

n the recent past, #E has successfully adopted inorganic strategy to further enhance its overall

competitiveness in the mar3etplace. =or instance, in +!1;, in order to aggressively epand intoonline ban3ing and further reduce its reliance on potentially volatile financial mar3ets for funds,#E $apital ac/uired the deposit business of -et@ife Ban3, an online ban3ing platform 'ithapproimately >6.9 billion in :0 retail deposits. 0imilarly, #E recently ac/uired 4resser, nc.'hich broadened its product portfolio 'ith technologies for gas engines as 'ell as its oil and gasproduct portfolio 'ith control and relief valves, measurement, regulation and control solutionsfor gas and fuel distributions. 5dditionally, #E epanded its portfolio of fleible subsea risersand flo' lines by ac/uiring Gellstream %@$ and the Gell 0upport division of (ohn Good#roup. Githin the energy management business, #E significantly enhanced its product andservice capabilities in po'er electronics, industrial automation and process controls by ac/uiring@ineage %o'er )oldings and $onverteam. =urthermore, in the end of +!1+, #E agreed topurchase the aviation business of 5vio 0.p.5., an taly*based manufacturer of aviationpropulsion components and systems for civil and military aircraft, for >9.; billion. 4uring thesame period, #E&s transportation segment completed the ac/uisition of ndustrea, a provider ofmining products and services 'ith a focus in underground mining. Thus, by focusing on theinorganic gro'th strategy, #E has been able to successfully epand its product offering to bettercater to the evolving re/uirements of its customers in the mar3etplace. This in turn supports thecompany in further diversifying its revenue base as 'ell as in maintaining competitive advantageover its peers.Robust research and development capabilities

#E #lobal esearch ?##A, the research and development ?H4A arm of #E, is one of the'orld&s most diversified industrial research labs. ##&s diverse set of technology epertisecovers range of fields such as electronics, chemistry, biosciences, computing, metallurgy, fluidmechanics, materials and imaging, among others.## is head/uartered in is3ayuna, e' 2or3 and has three other multidisciplinary facilities inBangalore, ndia 0hanghai, $hina and -unich, #ermany. ## has 'on various recognitions inrange of fields. =or instance, a team of researchers from ## 'on a'ard for their 'or3 ondevelopment of cro'dsourcing soft'are platform. The team built a ne', cloud*based, soft'areplatform that enables a global community of eperts to share ideas, design, and build complecyber*physical systems securely on the nternet. =urthermore, #E spends significant amount of


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its capital to'ards its H4 activities. The company funded H4 ependitures of >9,F+! millionin =2+!1+, >9,6!1 million in =2+!11 and >;,; million in =2+!1!. This represented morethan ; of the total revenues generated by the company. 0trong H4 capabilities enables thecompany to bring ne' and innovative products to mar3et and maintain technological leadership,'hich in turn enables #E to epands its customer base and generate incremental revenues.

Weaknesses

High indebtedness exposes to credit risk

#E&s significant debt level and related debt service obligations could negatively impact itsoperations. 0ince last fe' years, even though #E has been able to bring do'n its leverage level,it still has significant amount of eternally borro'ed funds. 5s at =2+!1+, the company hadapproimately >+;6 billion in long*term borro'ings 'hich resulted in debt to e/uity ratio of1.8;. Gith significant indebtedness the company has eperienced do'ngrades from variouscredit rating agencies. =or instance, in 5pril +!1+, -oody&s nvestors 0ervice do'ngraded thesenior unsecured debt rating of #E by one notch from 5a+ to 5a; and the senior unsecured debtrating of #eneral Electric $apital $orporation ?#E$$A by t'o notches from 5a+ to 51. This

do'ngrade could have a negative impact on the company&s cost of funds. =urthermore, as thecompany dedicates significant cash flo' from operations for the payment of principal andinterest on the debt, 'hich 'ould reduce the funds available for other purposes such asac/uisitions, capital investment and stoc3 repurchases. )ence, if the company fails to chec3 thehigh level of debt on its boo3s it could eperience adverse impact on its source of li/uidity as'ell as on its overall financial fleibility. =urther, high debt could have an adverse effect on#E&s li/uidity position and may hamper its credibility in the mar3et.

Dependence on third parties for raw materials

#E is reliant on third*party suppliers, contract manufacturers and service providers andcommodity mar3ets to secure its ra' materials, parts, components and sub*systems used in itsproducts. This reliance eposes #E to volatility in the prices and availability of these materials,parts, components, systems and services. 5 disruption in deliveries from the companyDs third*party suppliers, contract manufacturers or service providers, capacity constraints, productiondisruptions, price increases, or decreased availability of ra' materials or commodities, couldhave an adverse impact on #EDs ability to meet its commitments to customers or increase itsoperating costs. Iuality issues eperienced by third*party providers can also adversely influencethe /uality and effectiveness of the companyDs products and services and result in liability andreputational damage.

Opportunities

ncreased focus on energy sector =ollo'ing the +!!7*+!!8 financial crisis, #E has realigned itsbusiness strategy from being a maor financial services conglomerate to industrial andmanufacturing group.The company has no' started to focus on energy sector to fuel its futuregro'th. $urrently, oil and gas sector is the biggest industrial gro'th platform for the company.0ince +!!7, #E has spent around >19 billion ac/uiring companies that provide e/uipment orservices to the oil and gas industry.Githin the energy sector #E is highly focused on the opportunities arising out of the recentdevelopment in the shale gas mar3et. n this regard, in (uly +!1;, #E ac/uired @uf3in ndustries,a provider of artificial lift technologies for the oil and gas industry and a manufacturer of


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industrial gears, for approimately >;.; billion. The move broadens #E Oil H #as& artificial liftcapabilities 'ith solutions for a 'ider variety of 'ell types and technology for productionautomation and optimi"ation in the drilling industry. =urthermore, according to various industryestimates, the global artificial lift sector is epected to reach >1+.8 billion in +!1;. The currentgro'th is being fuelled by the development of unconventional shale plays and li/uids*rich

resource plays. =or instance, in orth 5merica, an increased pursuit of oil has driven demand forthe rod lift systems manufactured by @uf3in.5part from the shale gas sector, the company is also focused on the gro'ing @# mar3et.5cross the globe, the demand for small*scale @# production is gro'ing as ne' discoveries ofnatural gas are ma3ing it cost*efficient to use cleaner burning natural gas. n line 'ith itsstrategy, #E Oil H #as ac/uired substantially all of the assets of the 0alof $ompanies, a designerand manufacturer of small*scale li/uefied natural gas ?@#A technologies. 0imilarly, #E alsoac/uired F! sta3e in Beiing en$ryo Engineering, a Beiing*based oint venture 'ith Beiing-aison Engineering that speciali"es in engineering for all aspects of the oil and gas, chemicaland petrochemical sector. Thus, increased focus on the energy sector, especially shale gas and@# mar3ets, 'ould enable the company to generate sustainable business performance and

further drive its earnings and profitability.

ew contracts to enhance top line growth

#E entered into several ne' contracts, and further strengthened the eisting contacts in recentyears. =or instance, in 0eptember +!1;, #E $apital 5viation 0ervices, the commercial aircraftleasing and financing arm of #E, and Boeing completed an order for 1! 787*1! 4reamliners.5lso, in the same month, #E 5viation announced a >+.F billion contract 'ith #erman airline@ufthansa. =urthermore, in (une +!1;, #E 'as a'arded a contract 'ith its consortium partner,4o'ner E4, to supply 67 turbines, build and maintain the >;F! million Boco oc3 'ind farmin e' 0outh Gales, 5ustralia.-oreover, in -ay +!1;, the company signed a multimilliondollar, multi*year maintenance plan 'ith the :J*based energy company GE npo'er toprovide a full range of services for its #reat 2armouth and @ittle Barford po'er plants. n0eptember +!1+, #E Oil H #as and Bra"ilian energy company, %etrobras, signed the subsea'ellhead production contract, 'orth nearly >1.1 billion. This included the delivery ofapproimately ;8! subsea 'ellhead systems and installation tools needed in oil 'ell eploration.n the same month, 5thabasca Oil a'arded #E a contract to design and supply an integratedevaporator system for its 1+,!!! barrels per day )angingstone oil sands operation located near=ort -c-urray in northeastern 5lberta, $anada. 0imilarly in 5ugust +!1+, #E Energy-anagementDs po'er conversion business received a contract from 0ingapore marine servicescompany, 0'ire %acific Offshore Operations ?%teA @imited, to supply integrated po'ergeneration, propulsion, dynamic positioning and automation systems for eight ne' offshoreplatform supply vessels.Thus, such ne' contracts help the company in generating incrementalrevenue gro'th and further enhance its overall business results. -oreover, these ac/uisitions areli3ely to add ne' customers and complement the eisting product portfolio of the company.Epansion of mining business Gith focus on building ne' revenue stream and reducing itsreliance on its huge financing arm, #E has decided to epand its mining business unit. Thecontinuing urbani"ation and gro'th in energy demand in the emerging economies such as $hinaand ndia augurs 'ell for the long*term future of the global mining industry.n this regard, in 0eptember +!1+, #E Transportation launched its ne'est business unit, #E-ining, head/uartered in Brisbane, 5ustralia. =urthermore, the company plans to double the si"e


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of its ne' mining business to >F billion in revenue by +!16. -oreover, to aggressively positionitself in the gro'ing mining e/uipment mar3et, the company ac/uired the assets of =airchildnternational, 'hich manufactures underground mining e/uipment. 5dditionally, in the mid of+!1+, the company entered into an agreement to ac/uire 5ustralia based ndustrea, a provider ofsafety and productivity*enhancing mining e/uipment and services. Thus, these ac/uisitions could

help #E reach a global customer base 'ith enhanced products based on its propulsion systems,energy storage offering and system integration capabilities. n addition, these ac/uisitions alsohelp #E to penetrate into many untapped mar3ets and strengthen its position in the global miningsector.

!hreats

$hallenging macroeconomic and political environment in the :0 and Europe The challengingmacroeconomic and political environment in the :0 and Europe could limit #E&s gro'thprospect in the short term. The company is heavily reliant on the :0 and Europe mar3et 'hichtogether contribute around 66 of its total revenue. Though the :0 economy is slo'lyrecovering, largely driven by housing and consumer, the capital spending across various

industries still remains sluggish. 5s a result, the :0 is currently eperiencing its 'ea3estrecovery since the 1;!s. =urthermore, the company is epected to face maor political deadloc3in +!1; ranging from the fiscal situation, repeated debt*limit controversy and ta reform. =orinstance, in October +!1;, the :0 government 'ent through partial shutdo'n in 17 yearsprimarily due to epublicansD opposition to the healthcare reforms. This uncertainty could impactcapital investment in the :0 'hich in turn may result in lo'er orders across #E&s industrialbusinesses. n addition, #E also faces maor head'inds from the 'ea3 economic conditions inEurope 'hich is epected to continue into +!1;, especially in countries undergoing fiscalausterity programs. 5ccording to various industry reports, in the first /uarter of +!1;, the euro"one economy declined for si consecutive /uarters. n addition, nine of the 17 countries 'ere inrecession 'hich includes 0pain, =rance, taly, =inland, etherlands, %ortugal, $yprus, #reeceand 0lovenia. The company has significant operation in the :0 and Europe. These regionsaccounted for more than 66 of #EDs total revenues in =2+!1+. )ence, a challengingmacroeconomic and political environment in the :0 and Europe could impact #E&s sales volumeand overall business gro'th in the short term.

"nvironmental and other government regulations

#E&s operations, li3e other companies in the industry, face several environmental and othergovernmental regulations. t is subect to various federal, state, local and foreign environmentalla's and regulations in all of the urisdictions in 'hich it operates. These la's and regulationscover the discharge, treatment, storage, disposal, investigation and remediation of somematerials, substances and 'astes. #E is involved in environmental investigations or remediationat some of its current and former facilities, and at third*party sites. The company incurredependiture for site remediation actions of >9!! million in =2+!1+, =2>;!! million in =2+!11and >+!! million in =2+!1!. =urther, it epects that such remediation actions 'ill re/uireaverage annual ependitures in the range of about >9!! million over the net t'o years.n addition, #EDs businesses are subect to various :0 federal, state and foreign la's, regulationsand policies. These regulations and policies may force the company to modify its businessmodels and obectives or affect its returns on investment by ma3ing eisting practices morerestricted. =or instance, the :0 and non*:0 governments are underta3ing a substantial revision


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of the regulation and supervision of ban3 and non*ban3 financial institutions, consumer lending,the over*the*counter derivatives mar3et and ta la's and regulations, 'hich changes may havean effect on #EDs and #E $apitalDs structure, operations, li/uidity, effective ta rate andperformance. The company is subect to regulatory ris3s from la's that reduce the allo'ablelending rate or limit consumer borro'ing, local capital re/uirements that may increase the ris3 of

not being able to retrieve assets, and changes to ta la' that may affect return on investments.5dditionally, #E is also subect to a number of trade control la's and regulations that mayimpact its ability to sell products in global mar3ets. Thus, compliance cost associated 'ith suchstringent environmental and other government regulations could increase #E&s operatingependiture, 'hich in turn may have material adverse impact on the companyDs cash flo's,competitive position, and financial condition.

#ggressive competition

#E faces significant threat from the aggressive competition across it businesses globally. =orinstance, the businesses in 'hich #eneral Electric $apital engages are subect to competitionfrom various types of financial institutions, including commercial ban3s, thrifts, investment

ban3s, bro3er*dealers, credit unions, leasing companies, and consumer loan companies, amongothers. 0imilarly, 'orld'ide competition for po'er generation products and services is intensecharacteri"ed by various regional and multinational companies. The company competes 'ith anumber of :0 and international companies, including ;-, )itachi, )oney'ell nternational,-itsubishi $orporation, 0iemens, Tetron, and :nited Technologies, among others. Thus,operating in intense competitive environment could result in pricing pressure ris3s 'hich in turnmay adversely impact #E&s margins and profitability.

$%#&%#' (RO$%'"

3&' (r. E)S Gr. *ate 10+

'2$ *ange ,2'.-'&,1!.-

Shares /utstanding 1013.

Float 121!.0

ar$et Caitali4ation 2-3.5-6

Avg. Daily Trading 7olume3525502

Dividend8Div (ield,0.-82.!-

+

6oo$ 7alue ,12.00

Fis9al (ear Ends De9

2013E */E 13.0+

:T Det,1200.0

Common E;uity ,122-00

$ash flo' per share ?EstimateA ,2.

%rice to earnings ratio 20.32

4ividend yield0.-


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et %rofit ?EstimateA 1-'0

E)S

Diluted >1 >2 >3 >5 (ear ult.

2011A 0.33 0.35 0.31

0.3

! 1.3- 1.?

2012A 0.35 0.3 0.30.5

5 1.'2 1.?

2013E 0.3!A 0.3A0.3

A0.'

3 1.5 1'.?

S)**#R+

Orders gro'th of 1, including e/uipment orders up ;+ ?1.+ b


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#$e "ear wee%&" 'hart o( )E wth re&e$a*t +p a*d dow* tre*d &*e!:

:/NG TE* @) T*END

Short Term Trend

ntermediate Term Trend :ine


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,*e "ear da&" 'hart o( )E wth a 14 da" R-I a&o*. the /ottom wth a&& o$er/o+.ht !e&&

!.*a&! a*d o$er!o&d /+" !.*a&! a*d mar%ed d$er.e*'e! /etwee* pr'e a*d R-I:

,*e "ear 'hart o( )E wth a !&ow !to'ha!t' *d'ator wth re&e$a*t /+" a*d !e&& !.*a&!:


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,*e "ear da&" 'hart o( )E wth a !hort a*d &o*.er term mo$*. a$era.e wth /+" a*d !e&&

!.*a&! *d'ated /a!ed o* a two mo$*. a$era.e 'ro!!o$er !"!tem:


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$)D#*"!#' ##'+S%S O$ ,"

#eneral Electric is on pace to post earnings of about >1.6F this year, a year*over*year rise.The company continues to get bac3 to its industrial roots, and though subscribers 'ill note that


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revenues are set to decline, management is doing more 'ith less. The un'inding of #E $apitalremains a priority, and a bevy of ac/uisitions on the commercial side should prop up the top lineover time. anticipate greater cost savings in +!19. 5 total of >+ billion 'as set to be trimmedfrom the boo3s net year, and thin3 the company&s scale and global reach should lead to evenbigger savings 'hen all is said and done. e' $=O (eff Bornstein has a mandate to drive higher

cost*outs, and hence this e/uity got a bounce in price after the third*/uarter report. f so, upsidepotential to our +!19 E%0 call of >1.8! 'ill immediately arise. am inclined to believe theinvestment community is loo3ing for more good ne's to drive these shares higher aftermanagement disclosed that the share count 'ill be brought do'n some, ac/uisitions 'ill bereined in, and more operating cash 'ill be returned to shareholders. Eiting the credit card game'as a maor step for this industrial behemoth.#E $apital has ta3en the brunt of the criticismaimed at this company for years no'. 0elling or spinning off its private*label credit cards shouldbe a 'inK'in for all parties. These assets are undervalued in the #E portfolio and should beenticing to a number of bidders. 5lso, their divestiture ta3es a good portion of the ris3 out of the#E story. Bears are already grumbling about dilution, but 'e thin3 that attitude is too near*sighted. thin3 #eneral Electric&s timely stoc3 is a fine addition to a number of portfolios. The

blue chip offers above average appreciation potential ; to F years hence and a dividend higherthan the ndustry median.

-. beats recently cut consensus among analysts. E%0 of >!.;6 'as a penny ahead of0treetK(%- estimates, in line 'ith 'here the 0treet stood earlier this /uarter. ndustrial segmentprofits beat modestly as 4istributed %o'er upside offset 'ea3ness at Oil H #as, 'hile a lo'er*than*epected #E$0 ta rate helped slightly. Jeep in mind, ho'ever, that results 'ere merely inline 'ith 'here consensus stood in early 0eptember, a dynamic that could be e/uated to beatinga negative pre*announcement. This is /uite similar to 'hat happened in +I.

-./- Segment Review

(ower 0 Water

0ales decreased 1! y*o*y to >6.FB 'ith e/uipment revenues do'n 1; ?Thermal *1+, Gind*9+, 4istributed %o'er L99A, 'hile service revenues 'ere do'n F. Overall ordersncreased 1 y*o*y ?Europe up A to >F.B, 'ith e/uipment orders up ;7 ?driven by Gindand 4istributed %o'erA and service orders up 9 ?up 7 e*EuropeA. 0egment profit of >1.;Bincreased y*o*y on value gap, cost out and 4% gro'th. %ricing 'as do'n !.8, 'ithe/uipment do'n +., partially offset by services up 1.9.

Oil 0 ,as

evenues increased 18 ?about half core, half organicA to >9.;B, on e/uipment up 1 y*o*y?subsea L+;, drilling H surface L17A 'hile service revenue 'as up 18. Orders of >9.9B'ere up 9, 'ith e/uipment orders up ; on gro'th in turbomachinery ?L17A partially offsetby subsea ?*91A. 0ervice orders 'ere up 6. 0egment profit of >F1- increased 11 y*o*y, asac/uisitions, lo'er measurement H control gro'th, and proect delays drove ! basis points ofmargin contraction. %ricing 'as do'n !.+ against a positive 1.7 comparison.

#viation


17/21

evenues increased 1+ ?11 coreA y*o*y to >F.9B, 'ith e/uipment revenue up 1! driven byhigher engine shipments, and service revenue up 19. Overall bac3log increased to >119B ?L9se/uentiallyA. $ommercial engine orders increased 9 y*o*y to >;.8B, 'hile military e/uipmentorders 'ere do'n ;! y*o*y. 0ervice orders increased y*o*y to >+.7B ?commercial L1F,;I spares 54O LA. #E shipped FF commercial engines in ;I1;, up 8. 0egment profit

increased 18 y*o*y to >1.!B driven by strong volume and value gap.

Healthcare

evenues 'ere about flat y*o*y at >9.;B, belo' our L9 estimate. #eographically, revenues ingro'th mar3ets 'ere up F, :0 L+, Europe up + and (apan do'n +7. Orders of >9.7B'ere up +, 'ith e/uipment orders up 6 ?:0 up 8 and Europe flatA and service orders do'n9. %rofits increased 7 to >66F-, as restructuring benefits more than offset negative pricing.

!ransportation

evenues 'ere flat y*o*y at >1.9B, belo' our up 6 estimate, as gro'th in services ?L17Aoffset lo'er e/uipment revenues ?*19, locomotives shipments flat y*o*yA. Orders of >1.6B

'ere up ;9. E/uipment orders 'ere up 6F, driven by a large 5 locomotive order for +7Funits, 'hile service orders 'ere up 8. 0egment profit increased 1F y*o*y to >;!6- in the/uarter, driven by positive value gap and services gro'th, 'hich also drove margins up ;!! basispoints.

"nergy *anagement

evenues decreased ; y*o*y to >1.8B, belo' our L6K>+.!B estimate, driven by lo'errevenues in digital energy ?*+7A. Orders of >+.!B 'ere up 16 y*o*y, 'ith digital energy up+;, po'er conversion up 1, and intelligent platforms up 16. 0egment profit decreased to>18- in the /uarter ?vs. >9+- in ;I1+A, driven by negative volume leverage partially offset bypositive value gap, as segment margins 'ere do'n 1+! basis points.

Home 0 1usiness Solutions

)ome H Business 0olutions revenues gre' 7 y*o*y to >+.1B, above our LF estimate.5ppliances revenue 'as up 11, partially offset by lighting revenue, do'n 1. ;I housingstarts 'ere up 1, boosted by single*family up 16 and multifamily up +7. 0egment profit'as up +8 y*o*y to >77-, and margins 'ere up 6! bps y*o*y.

!"&H%' ##'+S%S O$ ,"


18/21

5n up price channel can be seen developing since =ebruary +!1;, the stoc3 has crossed both the

F! 'ee3 -oving 5verage and the chomo3u $loud in 4ecember of last year 'ith increasing

volume. The $urrent 0 ndicator is above 7! and at 7F.; 'hich indicates that the 0toc3 is in

an overbought state right no'.

$urrently the stoc3 price is above the chomo3u cloud sho'ing also that the stoc3 is in a Bullish

or a ery Bullish trend. f you loo3 at the -oving 5verage $onvergence 4ivergence 5nalysis of

the stoc3, there is a $enterline $rossover 0ignal 'ith a %ositive -5$4 'hich indicates that the

1+*'ee3 E-5 is above the +6*'ee3 E-5. %ositive values increase as the shorter E-5 diverges

further from the longer E-5. This means upside momentum is increasing. Ge can also see that

in the middle of October, there has been a 0ignal line $rossover by the -5$4 'hich also

indicates a bull trend.


19/21

=or the @ong un into -arch +!19, The @ong Term Trend line along 'ith the F! 'ee3 -oving

5verage 'ill act as maor support.

%$E OB(E$TE

Short !erm: 1earishM 4ue to the 0,-5$4 analysis,there is a short term bearish reversal

trend epected to pull the stoc3 to about >+6.F.Risk 'evel of losing 23 4 2- in the short term.

%ntermediate :1ullish * -y %rice Obective for the stoc3 3eeping in mind the time frame of

4ecember ;1st +!1; to -arch ;1st +!19 in mind 'ould be a maimum of >;9 and a minimum

of >+8.F based on the Trenline analysis,chomo3u clouds,0 ndicators,-5$4, $andlestic3

pattern and $ontinuation $hart %attern?:p %rice $hannelA analysis.

'ong !erm #nalysis: 1ullishthe stoc3 'ill move to a range bet'een >;7 to >9+ in a ;*F year

period.

*#R5"! O)!'OO5

Gith the Ongoing IE; pushing the 0H% to hit all*time highs at a record rate surpassing all

analyst epectations. epect a short term correction coming soon. But the mar3et is heavily

driven by the =ederal eserve policy on Bond Buying and is being closely monitored by traders

all over the 'orld.)ence,any pull bac3 in the IE program or NTaper in the bond buying

program announced in 4ecember +!1; or =ebruary +!19 of net year is going to cause the maor

correction to pull the bulls bac3 'ith the bears being set into motion.

%rice Obective < -aimum of < >18F! and -inimum of > 17!! ?+!! day -5 acting as supportA

545$E 4E$@E @E

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G.E Case Study and Charting Assignment

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