Great results for such a large company, but everything is so ho-hum. Everything seems so stable and predictable. One could almost fall asleep during the call.
• For the first quarter, EPS up 19%, cash generation up 100%
• Global infrastructure business doing great
• Financial services continues to execute well
• $10 billion of free cash flow for 2006
• 13% to 17% EPS growth for the year for 2006
The investment community knows we are NOT in an environment of predictability and stability. We are in a period of globalization, creative destruction and boom and bust. While stability is often comforting, with listening to GE’s management, the complacency was discomforting and almost feels like the calm before the storm. The storm might be five years out, but you have a sense it is coming.
When speaking about new high growth business, the comments are so antiseptic. There is little passion associated with pure high growth businesses.
While the company does a great job managing a widely diverse group of businesses, one's gut instinct says it is not sustainable for the long term. That is why the stock is doing little after great results. GE’s valuation has gone from a P/E of 30x at the market’s peak in 2000 and is now down to a P/E of 17x 2006 earnings. No matter how great the results are, this stock will not move. The “Invisible Hand” is telling us there is something wrong.
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