4 replies to this topic

[humble1]

this is a new development, to me anyway. now, all of a sudden, stock buybacks are a negative and not a positive. maybe this is a special case, but even if it is, the change in mindset, given current conditions but really at any time, make sense. so much for another one of maria's great pools of liquidity, the corporate cash stash. not required to fulfill buyback goals, which corporation will not conserve cash and quietly pull the orders ? and this brings me to GE, which i have focused on for a long time, in light of some recent developments. the recent sale by GE of its plastics unit was not able to be financed in the commercial paper market. GE has a tripA rating, which it uses to be, what some have called, the biggest subprime lender in the world. because of this and its murky financials and its well known "managed earnings" approach, i have long thought there would be a day of reckoning. this week we have heard of geenral lock-up in the commercial paper market and, to some degree, in the corporate bond market. so far, the slipping price of GE has been explained as caused by folks who need money and raise it by selling GE's highly liquid stock. but, i think there is more to it. WATCH GE !!!! if it really starts melting, can "calamity" (tm: fed's poole) be far behind ? p.s. he will come to RUE that word !!!!!

[ogm]

this is a new development, to me anyway. now, all of a sudden, stock buybacks are a negative and not a positive. maybe this is a special case, but even if it is, the change in mindset, given current conditions but really at any time, make sense. so much for another one of maria's great pools of liquidity, the corporate cash stash. not required to fulfill buyback goals, which corporation will not conserve cash and quietly pull the orders ?

and this brings me to GE, which i have focused on for a long time, in light of some recent developments. the recent sale by GE of its plastics unit was not able to be financed in the commercial paper market. GE has a tripA rating, which it uses to be, what some have called, the biggest subprime lender in the world. because of this and its murky financials and its well known "managed earnings" approach, i have long thought there would be a day of reckoning.

this week we have heard of geenral lock-up in the commercial paper market and, to some degree, in the corporate bond market. so far, the slipping price of GE has been explained as caused by folks who need money and raise it by selling GE's highly liquid stock. but, i think there is more to it.

WATCH GE !!!! if it really starts melting, can "calamity" (tm: fed's poole) be far behind ?

p.s. he will come to RUE that word !!!!!

Don't know about Nestle, buy if stock buybacks are done with borrowed money.. its a negative.

Soem companies borrow to buy back stock, some use their own cash. For those that use cash its positive.

Edited by ogm, 16 August 2007 - 05:26 AM.

[humble1]

ogm: thanks for your comments. i get your drift. but few companies, even those with lots of cash, don't have at least that much, or more debt. and even those who don't have any significant debt or have to take on new debt to buy back stock, would have to be thinking VERY carefully about giving away control of any of their cash hoard, given the new environment. my guess is that buybacks, the ones really executed and not just announced as intentions, drop dramatically. it is SURVIVAL time for smart corp execs, imho.

[dasein]

I believe 40% or more of their profits come fromthe financing division... GE from Yahoo Total Debt (mrq): 467.14B Total Debt/Equity (mrq): 3.992 Current Ratio (mrq): 1.866 Book Value Per Share (mrq): 11.421 Cash Flow Statement Operating Cash Flow (ttm): 36.87B Levered Free Cash Flow (ttm): -84.98B klh

[humble1]

dasein: oh my gawd; it's much worse than i thought. $ 467 billion in debt. NO WAY, imho, GE will make it out of this intact. and think of the folks who hold that debt. i think i will go throw up. p.s. leveraged free cash flow at $85 billion ? i don't think that will fly in this storm.

Edited by humble1, 16 August 2007 - 09:22 AM.