30 October 2018 by lberuti
The reporting season is nearing to an end and most companies have already announced their results for the third quarter. This morning, it was the turn of GE ( General Electric Company ), the embattled industrial giant, to release their earnings. And they were not good. After revenues declined from $30.66Bln to $29.57Bln, which was short of analysts’ expectations, the company said it will likely miss its full-year earnings targets due to problems with the power generation and slashed its quarterly dividend to a penny from 12cts a share. A $22Bln charge related to the power division was announced. Worryingly for investors, the management announced that federal regulators are looking into its accounting practices over the $22Bln write down. The SEC is already looking into how GE took a $15Bln hit after one of its subsidiaries, North American Life and Health, miscalculated the cost for the care of people who lived longer than projected. And the company said in February that the Department of Justice may take action in connection to an investigation into GE’s subprime mortgage loans business. GE’s stock got hammered and traded at levels not seen since 2009. While GE’s 5-year risk premium is still a long long way away from the 750bps at which it traded that same year, it was pushed 19bps wider at 127bps, the widest it has been since 2012.