GE’s rebounded quite a bit from its lows a couple weeks ago, but the AA+ rated company still has a ton of work to do to convince investors that its GE (GE) Capital unit will not end up bankrupting the company.
As it promised last month, it’s holding an analyst meeting tomorrow where it will attempt to unpack and make transparent everything on its balance sheet, so investors will be convinced that there’s nothing to worry about.
Bloomberg has a good roundup of some of the company’s trouble spots, which they’ll be addressing tomorrow.
- GE Capital’s financial assets total $637 billion, accounting for half of the parent’s profits last year
- Consumer lending unit GE Money has some $60 billion in home loans and another $32 billion private-label credit card debt. Losses in this unit may total over $15 billion through 2012, says an analyst.
- $190 billion are in corporate loans and leases, an area deemed to be particularly opaque.
- GE Capital has $26 billion in Eastern and Central Europe, assets thought to be particularly vulnerable, given the economy. For its part, GE says this is still profitable.
As an analyst in the piece notes, GE doesn’t mark-to-market so it may be able to “ride out the storm” — basically live on lighter cash flows in the short term, but ultimately make it up as these assets rebound. So far though, the fact that they haven’t taken huge writedowns on most of this stuff hasn’t really helped the stock.
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