Thursday, March 5, 2009

Worries Over GE "Overdone"

The CFO of GE came on CNBC today and tried to ease concerns over GE Capital. Investors have been speculating on what the concerns over GE Capital are, worrying that GE Capital will not have enough capital and there is too much risk around the company. Today the CFO came on and said that any concerns over GE Capital are overdone and that GE Capital is going to be profitable in the first quarter and throughout 2009. He also acknowledges that GE Capital has not been very transparent and that GE is planning a meeting during the week of March 16th that will give investors a better idea of how GE Capital is doing and what the actual risks are. 

I believe GE  will go up after this meeting. The management seems extremely confident about GE Capital and believes that the risk is way overdone. When we see transparency in GE Capital, investors will realize that the risk they speculated is simply not there. Management also insists that even if GE get its credit rating cut, it will not impact how GE runs its business right now because GE has more than enough money to fund their operations. Once investors get the full picture, GE should shoot back up. That is not to say it won't go down from now and March 16th, but I think overall GE finishes up for the month.   

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