GE - Final Thoughts

Ticker Symbol: GE

GE Final Thoughts

General Electric is exposed to three main sources of weakness that prevent value buyers from swooping in to buy one of the largest companies in the world. The first, and most sensitive division exposed to market risk, is the finance division. Because GE's lending unit has so much exposure to non-performing assets, the finance unit has been the cause of several recent downgrades by various rating agencies.

The second source of weakness relates to its consumer products divisions. With unemployment rising, wages declining, and savings increasing, consumers are pulling back on their discretionary spending habits, forcing GE to reduce inventory held and mark down prices.

Also weighing on GE's profits is a substantial decrease in advertising revenue at its NBC brand, excluding CNBC. As more consumers shift to alternative sources of entertainment as well as digit recording of television shows, advertisers are seeing less benefit in purchasing air time.

GE recently cut its dividend 68% to from 31 cents to 10 cents. GE's huge revenue generating machine is capable of ramping back up once economic activity rebounds. Until then, safer bets could be had.

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