The Economist Shines a Bright Light on GE’s Opacity
If your were a subscriber to the Transparency Label Initiative, you would know GE doesn’t qualify for a label indicating it provides sufficient disclosure so you can know what you own.
The Economist magazine agrees.
In its daily Espresso, the Economist commented on GE’s opacity and how this opacity made it impossible for investors to know what they own.
| In need of light relief: GE |
| The conglomerate formerly known as the world’s best company will probably report lacklustre fourth-quarter results today. GE’s fall has been vertiginous. Its shares, cash flow and forecast profits have dropped by about 50% since 2015. Last week its financial arm disclosed a $15bn capital shortfall due to a revision in insurance reserves. John Flannery, the boss since August, must clear up the mess made by his predecessor, Jeff Immelt. He seems to recognise the gravity of the situation, suggesting GE might be broken up. Yet an unnerving sense lingers that no one fully understands what has gone wrong. How much cash flow does GE sustainably make and where? How much capital does it employ and where? What are the liabilities that must be serviced, both at GE’s core industrial business and its financial arm? Mr Flannery has yet to fully answer these questions. Until he does, GE will be stumbling in the murk. [emphasis added] |
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