Friday morning brings a highly charged earnings report from General Electric (NYSE: GE ) . The omninational conglomerate will tell us how fiscal 2007 turned out. See why our readers called the peacock the second best stock to own in 2008 -- ahead of Buffalo Wild Wings but after Apple -- and then come back for a deeper look at the numbers and community consent.
What Fools say:
Here's how GE's CAPS scoring rates against some of its peers and competitors:
|
Market Cap (billions)
|
Trailing
|
CAPS Rating
|
|
General Electric
|
$347.1
|
16.0
|
****
|
|
United Technologies (NYSE:UTX)
|
$69.2
|
17.2
|
*****
|
|
Walt Disney (NYSE:DIS)
|
$55.3
|
13.0
|
****
|
|
Caterpillar (NYSE:CAT)
|
$40.5
|
12.3
|
****
|
Data taken from Motley Fool CAPS on 1/17/08.
Regardless of which of GE's many segments you look at, there's plenty of quality competition to be had. But the giant sports a respectable four-star rating of its own, too. Our players like to say that you can't keep a good company down too long. The bears point to the massive financial segments getting dragged down in the ongoing credit crisis.
What management says:
The NBC Universal entertainment division garnered high praise from CEO Jeff Immelt in the third quarter. The segment "posted its fourth straight quarter of segment profit growth, highlighted by the successful launch of its new, prime-time television line-up, a strong cable performance and a slate of popular summer films. Jeff Zucker and his team have done an excellent job improving the content, operating the business, and expanding the portfolio."
But the same day, fellow Fool Rick Munarriz commented on a rumor that GE will sell NBC Universal after the Olympics this summer. And a couple of weeks later, NBC and other media producers saw their writers go on a strike that is still happening, and it's making the studios look stupid for squandering the massive opportunities that are present in today's fledgling digital media market. Now NBC lost the Golden Globes awards show, an event that usually puts some 20 million curious viewers in their couches, and the even bigger Oscars might be the next advertising magnet to fall.
What management does:
OK, but the proof is in the pudding. Healthy revenue and earnings growth in a difficult environment shows that Immelt is doing something right, and the margins remain as steady as you could reasonably hope for.
|
Margins
|
6/30/2006
|
9/30/2006
|
12/31/2006
|
3/30/2007
|
6/30/2007
|
9/30/2007
|
|
Gross
|
39.8%
|
39.1%
|
38.3%
|
38.6%
|
38.8%
|
38.6%
|
|
Operating
|
16.2%
|
15.7%
|
15.1%
|
15.1%
|
15.4%
|
15.1%
|
|
Net
|
11.8%
|
11.7%
|
13%
|
12.8%
|
12.7%
|
12.7%
|
|
FCF/Revenue
|
12.9%
|
10.1%
|
8.7%
|
7%
|
10.8%
|
11.1%
|
|
Y-O-Y Growth
|
6/30/2006
|
9/30/2006
|
12/31/2006
|
3/30/2007
|
6/30/2007
|
9/30/2007
|
|
Revenue
|
10.4%
|
13.1%
|
10.2%
|
11.1%
|
14.6%
|
16.8%
|
|
Earnings*
|
10.1%
|
5.9%
|
10.7%
|
11.8%
|
16.9%
|
18.7%
|
*Earnings from continuing operations. All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.
One Fool says:
And perhaps post-Olympics would be a good time to unload the NBC property. GE likes to have a top-three market share in every market, ever since the days of hard-nosed ex-CEO Jack Welch, and in the 2006-2007 TV season, NBC ranked dead last. It was the first time ever that News Corp. (NYSE: NWS ) subsidiary Fox Broadcasting ranked ahead of NBC, even though the peacock had bona fide hits on its hands like Heroes and Deal or No Deal.
Universal isn't doing much better at the box office. Of the 10 biggest money makers released in 2007, Universal notched one entry, in seventh place. In 2006, the studio produced none of the top 10. As much as Immelt is doing right with the rest of the company, then, it appears that NBC chief Jeff Zucker is throwing his hand. Maybe it's time for a change in scenery -- and NBC's management.
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