Original Post
Replies sorted oldest to newest
If I get the bread crumb trail in the article -- the unit has a paper value of $20 billion but only makes $4 billion per year out of $123B for them. So sell it off, make a $20 B return upfront and ... you know, waste invest it on some other new ideas... is the thinking.
One potential buyer would be Alstom transport. When Alstom power was sold to GE they got the trackside signal business in return as part of the package. They should still be flush with cash. Honestly, if the numbers above are correct, then a sale doesn’t make sense. Most businesses would be happy to make 20% annually. What also has me puzzled is that two years ago, when GE bought Alstom power, the stated focus was to concentrate on manufacturing and get away from the financial and credit markets. They did divest the financial stuff but their current activities don’t make much sense from the outside. Just mho.
Different guy at the top with different ideas plus he probably thinks the $20 billion should make $8 billion a year. A different market today-slow domestic market and they have satellite plants all over the world now.
As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
Mike CT posted:superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
GE is under pressure from activist investors (read: hedge funds) to increase their share price, and manufacturing train engines might not have enough ROI for them. As far as moving their headquarters to Boston, there are a lot of reasons (where they were in Connecticut was not exactly cheap, either), the Boston area has a lot of high tech research universities (ya know, places like MIT, Harvard, Northeastern, and a ton of other places), and it is also the kind of place that can attract the kind of talented people they want, they aren't moving manufacturing there or the like, this is white collar corporate offices. There are places down south that would be attractive, but it isn't going to be the really cheap rural areas or the like, it is going to be places like the research triangle in North Carolina, Atlanta , or Austin, thanks to the research university(s) nearby, and Atlanta especially has gotten a lot more expensive and also is a commuting nightmare, and Austin is not particularly cheap any more either, and the research triangle has other problems these days I won't go into. GE is pushing themselves these days as a "digital company", with the ads with the dorky programmer who admits he works for ge and the other hipsters are aghast, etc, and those kind of companies want to be around where this kind of talent comes out of and wants to work.
Maybe EMD will buy them. 
EMD doesn't exist any more...
EMD, owned by Progress Rail, owned by CAT... That said, I haven't kept up with current happenings. You have my curiosity up now.
Dennis Holler posted:EMD, owned by Progress Rail, owned by CAT... That said, I haven't kept up with current happenings. You have my curiosity up now.
To be accurate, when General Motors Corporation sold EMD to Berkshire Partners, quite some years ago, the "EMD" ceased to stand for "Electro-Motive Division", of General Motors Corporation. The new name became "Electro-Motive Diesel", which it technically still is, as it is owned by Progress Rail (which is a wholly owned subsidiary of Caterpillar Inc.). All the "old" logos and names have been removed from the McCook plant, and the sign "out front" on 55th Street, reflects Progress Rail.
Yes, that is true, Thanks for reminding me.
Bottom line here is that this is a very cyclical market. Eight or ten years ago, railroads were still buying hundreds of new units and GE was king. Now that coal traffic is way down, and there is an oil glut (not so many tank cars moving US oil, more imports when it's cheap), railroads are parking hundreds of units, and new orders are in the tank.
EMD couldn't even field a Type 4 compatible loco for several years and missed the market (Type 4 is lower emissions, a 2 cycle diesel can't meet the standards, GE has had a 4 cycle diesel for many years - they have a product now).
The market will be back, but will GE wait it out? Not sure there will be a buyer at the price GE wants - at least, not now.
Might be a culture thing. Boston and Ft. Worth are in states that arex180 degrees apart in that department.
Both UP and BNSF have over 8000 locos each. CN, CSX, and NS have smaller but still significant rosters. If the past is any indication, a number of stored locos will never run again due to cost to overhaul, cannibalization, and high cost to operate, along with reduced reliability. If the economic life of a loco is about 15 years, and the economic life due to lower miles, etc. increases to 20 years, that says that BNSF and UP each should require about 400 locomotives per year to keep the roster costs under control. So when the market comes back, it should come back suddenly and in significant numbers. I think the idea of selling Transportation is premature at best. Not to be overlooked is the "Predix" style monitoring used by GE on new locomotives. If CEO of GE Flannery wants to grow this computer type activity, he has to have that equipment out there or Predix won't grow, his stated goal.
From a business perspective, downsizing and cuts will only go so far in improving results. At some point, you have to grow the purchaser base both wider and deeper. That is the top line....... Is a much smaller GE with a much more concentrated set of product offerings and customers a good thing for stockholders? I don't think so....... How many purchasers are there for jet engines, for example? Three counting the Dept. of Defense?
bigkid posted:Mike CT posted:superwarp1 posted:Mike CT posted:As they (GE) move the corporate head quarters to Boston, MA, from Connecticut, you would think they need a fair amount of cash, IMO, Boston is not cheap. A 300 thousand home in the Boston area, even out beyond the I 495 loop, is a fixer-upper. New home values have gone up since GE announced the move to the area. As mentioned it is not uncommon for these large corporations to draw the bottom line at 25% to 40% (raw profit). Apparently the electromotive business is lean profit for them. IMO, Mike CT.
Hence I was surprised when they announced the move to Mass. Figure they would move down south where everything is cheaper.
Apparently, those in charge, very much like the Boston Metro Area. I got to admit with the existing transit system, The big dig, and all other big city values, May be one of the best east coast metro living areas. Some serious history, built into Boston, I wish them well.
One of the Northeastern metro values, that is often overlooked is the colleges and universities. A supply of young high tech-savey engineers that may not necessarily be available along the gulf coast. I could be wrong and often. Mike CT.
GE is under pressure from activist investors (read: hedge funds) to increase their share price, and manufacturing train engines might not have enough ROI for them. As far as moving their headquarters to Boston, there are a lot of reasons (where they were in Connecticut was not exactly cheap, either), the Boston area has a lot of high tech research universities (ya know, places like MIT, Harvard, Northeastern, and a ton of other places), and it is also the kind of place that can attract the kind of talented people they want, they aren't moving manufacturing there or the like, this is white collar corporate offices. There are places down south that would be attractive, but it isn't going to be the really cheap rural areas or the like, it is going to be places like the research triangle in North Carolina, Atlanta , or Austin, thanks to the research university(s) nearby, and Atlanta especially has gotten a lot more expensive and also is a commuting nightmare, and Austin is not particularly cheap any more either, and the research triangle has other problems these days I won't go into. GE is pushing themselves these days as a "digital company", with the ads with the dorky programmer who admits he works for ge and the other hipsters are aghast, etc, and those kind of companies want to be around where this kind of talent comes out of and wants to work.
You are forgetting something which I also forgot. The huge tax breaks the state gave GE.
The $20 Billion "paper value", maybe not be the capital investment. The 20 billion represents what they think they can sell the business for. Or it might be what is paid off vs what is still being paid for with loans. Usually when a business is sold, the buyer takes over the outstanding loans to the business.
Their investment in capital equipment (plant, tooling etc) may be much more than that perhaps 100 billion, then 4 billion ROI is pretty slim.
This is just a thought, not facts.
Only the inner financial circle knows-if they do. The board didn't even know the old CEO had an empty company airplane following him around. The Erie plant is so old it has to be paid off unless they borrowed off it.
Farmer_Bill posted:Maybe EMD will buy them.
How about Tata motors?
