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GE cuts dividend to 10 from 31 cents


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The Board of Directors authorized a plan to reduce GE's quarterly dividend to $0.10 from $0.31 per outstanding share of common stock, effective for the second half of 2009.  This reduction will likely not be a surprise to the market and should help it retain its AAA rating so I would expect many holders of GE shares to be pleased that the decision has been made.

 

 

 

 

 

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Lots of uncertainty with GE.

 

General Electric Falls Again As Credit Rtgs Remain In Focus

 

But even the cut couldn't stem fears that the rating was in danger, as Standard & Poor's and Moody's both said later Friday they would leave their negative outlook unchanged.

 

Moody's analyst Richard Lane said in a Friday release that "the reduction in GE's common dividend will address some of the concerns regarding the stress on GE's cash flow" but reiterated that deteriorating asset qualities and tight credit markets make it still vulnerable to a cut.

 

If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts.

 

Monday, equity analysts also remained in doubt the move would prove a cure-all for GE's problems, though they applauded it as necessary anyway.

 

"We don't expect the incremental dividend reduction to translate to a corresponding increase in liquidity since we never expected GE's cash flow from operating activities (COFA) in 2009 would adequately fund GE's prior dividend payouts," analysts at Sterne Agee said in a Monday note. "We currently believe Moody's is likely to reduce GE's credit rating sometime during mid-late March, 2009, which is likely to be quickly followed by other rating agencies."

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>If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts.

 

Again, GE CEO says that's not the case, media just like report what the think rather than facts these days.

GE has access to the CP program backed by Fed - many of its competitors don't.

 

verify verify verify

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Albertmeipp,

Can we put a number on the impact of losing the coveted AAA rating.

How much debt has to be refinanced, or additional collateral to be deposited ?

 

When is that debt due ?

 

Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ?

 

How about writing the Puts for strike price of $5 which expire in Jan 2010.

 

they are going for $1.20.

So we will break even until $3.80

 

If ge goes below that, then we lose money.

 

 

 

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Albertmeipp,

Can we put a number on the impact of losing the coveted AAA rating.

How much debt has to be refinanced, or additional collateral to be deposited ?

 

When is that debt due ?

 

Basically, can someone point me to the press statements or in which portion of the Quarterly reports we can find this information ?

 

How about writing the Puts for strike price of $5 which expire in Jan 2010.

 

they are going for $1.20.

So we will break even until $3.80

 

If ge goes below that, then we lose money.

 

 

 

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>If GE lost that coveted rating, it could soon find itself out of compliance with some debt and be forced to refinance or pay back outstanding debts.

 

Again, GE CEO says that's not the case, media just like report what the think rather than facts these days.

GE has access to the CP program backed by Fed - many of its competitors don't.

 

verify verify verify

 

He's the CEO. He's supposed to be a cheerleader for the company.

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BofA and MS were profitable last year as well.  Does that mean there is nothing to worry about there either?  Would either of these be alive (independent) today without having received massive amounts of capital from the government?

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In fact, BAC is probably way more fine than its $20B market cap would suggest ( or whatever it is now, it's rather difficult to determine the number of shares outstanding sometimes).  Any draconian prediction of losses from Merrill has been totally absolved by the government.  Soros' theory of reflexivity is truly at work here. 

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Can't read the full article without a subscription.    How does it say they were forced to buy Merrill?  Was their banking charter going to be revoked if they didn't? 

 

Nobody was "forced" to take the original TARP money.  They just didn't like the alternatives, as in having their capital ratios subject to immediate review.

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The original TARP money in September was involuntary.  They didn't need to sell stock until contracting to purchase Merrill.  

 

I'm not saying BAC is perfect but it is a mis-characterization to lump them in with Citi.  I would sell stock too if I was buying an over-leveraged cowboy I-bank.  I definitely wouldn't argue with the ML deal being an impulsive mistake.  At least it wasn't for cash though.  

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I still have never seen any characterization of how any of the TARP banks were forced to do anything.  Yes I've seen suggestions of that in the papers, but I also remember reading that the sub-prime problems were "well contained".

 

I've seen numerous times since TARP that the institutions are welcome to pay back the money any time, there is no early pre-payment penalty.    So if they were forced to take the money, why don't they just pay it back? 

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The article about the original (September/Involuntary/first round of the original TARP) TARP injections that I read in the WSJ is too old so now it is archived.  The funds were involuntary injections of capital though.  The 9 largest banks were forced to take the funds.  The article detailed quotes from the meeting about how Stumpf ( or is it Kovacevich) didn't want to take the money and Paulson told them that they had to. 

 

Again, this is all predicated upon what was said in the article, and other articles I have read on being true. 

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