In this MarketFoolery podcast, host Chris Hill and Motley Fool Asset Management's Bill Barker dissect some of the day's top business stories, starting with more chatter about a potential breakup of General Electric (NYSE:GE) and why Wall Street doesn't seem happy about it.

Papa John's (NASDAQ:PZZA) is losing its CFO, and they'll explain why his departure is such a bad sign for the pizza delivery chain. Nestle is selling its U.S. candy business, but that's far less of a big deal than you might think. Also, jeweler Tiffany (NYSE:TIF) had a happy holiday season, with its earnings and comps pushed higher by a somewhat odd category.

A full transcript follows the video.

This video was recorded on Jan. 17, 2018.

Chris Hill: It's Wednesday, January 17. Welcome to MarketFoolery! I'm Chris Hill. Joining me in studio today, from Motley Fool Asset Management, Bill Barker. Happy Wednesday!

Bill Barker: Thank you!

Hill: You braved the snow and made it in. Congratulations, my friend!

Barker: Thank you, thank you! It was hard to dust it off the car in less than 30 seconds. I work quickly.

Hill: I think it was our colleague, Rob Burnett, who tweeted out this morning, "if you can clear away the snow with a broom, school probably shouldn't be cancelled."

Barker: Was school cancelled for you?

Hill: No, it wasn't cancelled here, it was the proverbial two-hour delay. And so it goes. On a day when we have news. We have news to get to here, businesses. We have news in the luxury industry. We have a big sale in the candy industry. We're going to start with General Electric. Holy cow! The Wall Street Journal reporting that General Electric is reportedly considering breaking itself up. For anyone who has ever advocated for any company to be broken up under the idea that doing so will "unlock value," that appears not to be the case today, because shares of GE are trading down, and they're close to a six-year low. John Flannery, the CEO of General Electric, who's been there for just a couple of months or so, I think is the most interesting CEO to watch this year, and it's for things like this. It's for things like him saying, "Yeah, sure, we'll consider this. There are no sacred cows at this company, and in fact, we may break the whole thing up." Tell me why -- on the surface, this seems like not the most insane idea in the world. And yet, the reaction from the stock and the reaction from plenty of investors is, not only is this bit an idea that will unlock value, but this is just flat out a bad idea for a lot of reasons.

Barker: It could be that, or it could be the reaction of late, which is that anything that GE says is going to reveal that things are worse than we thought. Every time any piece of information comes out these days, it's, there's more trouble than you could possibly have imagined regarding some of the underfunded pension obligations and the provisions that they have in the reinsurance business, it's just one bad report after another. And this doesn't really even come out as a report. I think the negative reaction that the market is placing on the news, if it qualifies as news, is, this will not be easy to achieve, and will not necessarily create value, because there's so much of a gray area in GE's financials that it's hard to separate. Although there are very distinct operations to the business, the financing of the businesses is muddled, and separating it all could be very difficult.

Hill: You're right. In the same way that Flannery has come out and talked about different divisions, I think it's natural and easy for a lot of investors to look at that company in those terms, here are the different pieces, in the same way that we've seen large conglomerates sell off various divisions -- speaking of which, we'll get to that later in the show in a completely different industry. But, we've seen that with Procter & Gamble over the last six years, "We're selling these divisions." Johnson & Johnson has done it to a lesser degree as well. What you're talking about with the financing, even though there are these specific divisions, is the financing so convoluted that it spreads across all of them? And, I guess where I'm going with this is, to some extent, is the way that they've been financing all these divisions likely to get them into some sort of legal trouble if that comes to light?

Barker: Not necessarily that they're doing something wrong at the moment as much as, GE Capital, for instance, has about $100 billion in debt, and that's how the capital division is financed. Well, the reason that it can get that debt at a reasonable price from the market is, other operations of GE, the Industrial division specifically and the Healthcare division, have good enough cash flows. So, when you look at the whole thing in its entirety, you have higher-rated bonds. The bonds that are issued by GE Capital are backed by all of GE, and the whole thing is better than the sum of the one part of GE Capital. 

Well, if you split all of this up, these bonds are going to get rerated, and those that bought the bonds under the belief that they had the backing of these healthy cash flow businesses behind them are now going to be owning something with a lot more risk to it, and therefore, the price of the bond is going to go down, and they're going to want their money back in one form or another. Usually one of the forms that they might try to get their money back is suing, that that violates the covenants that they had or believed they had when they were buying the bonds. There's just so much. Given that there's more than $30 billion of underfunded pension obligations, who gets that? Who would like that part of the business?

Hill: I was going to say, in the divorce, who keeps that piece of furniture?

Barker: Yeah. So, who wants to buy any of these businesses is a different question from, if you buy the business, you have to buy some of the debt, some of the downside, some of the obligations. And that's a little bit messier.

Hill: One of the pieces of this story today, one of the ripple effects is, as GE's stock continues to drop -- again, closing in on a six-year low -- people looking at General Electric's place in the Dow Jones Industrial Average as being under threat. That at some point, if this thing drops much lower, then the people who decide what stocks stay in the Dow Jones Industrial Average, and there are just 30 of them, and which ones need to go, they may decide to boot it. And by the way, it's been nearly four years since this happened. This is not like the S&P 500, which rebalances every year. This is almost whenever they feel like it. It was March of 2014 when the Dow Jones people got together and said, "AT&T has got to go, and Apple, welcome to the club!"

Barker: At the end of 2013, GE was still on a roll. It was a nearly $300 billion market cap company. Today, it's less than $150 billion. So, about half the size, a little bit better than half the size. Its prominence is still significant in the American economy, and in a collection of the biggest companies. But it's obviously been lapped by many companies. It's nowhere near the largest company in America, which is a title it held at various times. And it's not going to get back there, certainly not by breaking up. And I think that should have no influence in what they do, whether they're a member of the Dow Industrials or not. But, it's an interesting question. If they were to break up, there's probably no part of that that you would especially want to have in the Dow, and there would be an opening.

Hill: But that would create greater demand for the stock, as there are funds that are just Dow funds, in the same way that there are funds and investors out there who are looking looking for dividend stocks. So, it's not just that GE has basically been cut in half since the end of 2013. It's also that they've cut their dividend.

Barker: Yeah. The number of purchasers of the stock is dwindling all the time, as evidenced by being down another 4.5% so far today. More sellers than buyers. When you talk about the most interesting CEO of the year, what's the thesis there?

Hill: That at any moment, John Flannery could come out and announce almost anything.

Barker: "We're going into cartoons!"

Hill: [laughs] Say what you want about the way that his predecessor, Jeff Immelt, ran that company. One word that was --

Barker: Not enough private planes for any one trip.

Hill: [laughs] Exactly. One of the words that has been associated with GE, certainly with GE the stock, over the last 20, 30, 40 years, is some version of the word steady. This has been a steady business, this has been a steady performer, and it's certainly been a steady payout of dividends. I think John Flannery is the most interesting CEO to watch this year because literally everything is on the table in terms of what he will do with this company.

Barker: As I said earlier, that I was going to go in this direction, your view is that this is a "so crazy it just might work" thing with him. Anything might go. And right now, the market is looking at it and saying, "That's crazy!" And you're saying, "Well, yeah! It's so crazy, it just might work."

Hill: It might work. And I don't own this stock, but I totally understand why today, a majority of investors who have a say in what's happening with GE are looking at it and just focusing on the first two words of that phrase. They're just looking at GE and saying, "That's so crazy! And I want no part of it." But, that's why I think it's going to be interesting to see how all this plays out. It's not inconceivable that in three to five years from now, Flannery has gotten General Electric going in such a way that we look back and it's the 10,000 word article that's written about, "Here's how Flannery turned it around. Here are the bold moves he made, and here's how he turned it around."

Barker: It's been a long period of suffering for GE shareholders, and I'm sure they're hoping that it gets better. The stock has returned a little bit, over 1% per year over the last 15 years, as compared to 10% for the market. This has been a brutal time. A lot of the pain has been experienced in the last 12 months, as the stock has almost been cut in half in that period. So, right now, the reflection of the stock price is more reflecting the information that has come into the market since Flannery came in, rather than his or the company's actual performance. I think there's just more and more being revealed that things were not what they seemed to be.

Hill: Alright, let's move on. If you're listening and you're good with numbers, good news. Papa John's is looking for a CFO. Lance Tucker, who is the chief financial officer and chief administrative officer at Papa John's, is leaving at the end of February to become CFO at Jack in The Box. He's been at that company for almost 25 years. Between this and John Schnatter deciding -- or, maybe the board deciding that Schnatter no longer needs to be the CEO -- that's basically your two most important executives gone. Maybe not a surprise that shares of Papa John's are falling today.

Barker: Right. There's less and less visibility as to who's going to be calling the shots and how much confidence to have in them. You're left with a company that got to where it was on, I guess, the strength of its operations and its leadership, and I think some resonance that the commercials achieved through the CEO himself.

Hill: Yeah, the personality. That came across in the ads.

Barker: What next, is the question. At the moment, it's a pizza chain, it's not renowned for its delicious pizza above everybody else's. It's a highly competitive market. They have better operations in terms of having achieved a platform for online delivery and mobile orders and things like that, that's going to be very valuable going forward and is very valuable today. But, who's calling the shots, and what shots are going to be called, and a far more comprehensive description of why is this all going on than has been provided so far. In the absence of any of that, the market is entitled to and will continue to not be interested in buying the stock.

Hill: Patrick Doyle is leaving Domino's. Do you think maybe he wants to go to the other team and see if he can run that shop?

Barker: I wouldn't have any idea. But everyone has their price. And I suppose he's able to command a pretty good price, if that's where they wanted to go. As you say, he's available, but I have no reason to believe that this is of interest to him.

Hill: Nestle is selling its U.S. candy business to Ferrero, which is an Italian-based candy company. Nestle is going to get a nice big check for $2.8 billion, which is a big check for the business of Butterfinger and Baby Ruth and my personal favorite, Raisinets, and more. There are others in that portfolio, too. Here's what surprises me about this. I think, if you asked 100 people about the business of Nestle, just the proverbial person on the street interview, if you ask 100 people, what business is Nestle in, I'm guessing a majority will refer to the candy. And in fact, the U.S. candy business represents just a tiny portion of the overall business of Nestle.

Barker: Yeah, it's about 1%, a little bit more than 1% of the global business. Nestle the company is much more about pet food and bottled water and infant formulas. I think they're looking at all of that as a more interesting future than candy, which is a stable business but not really a growing business. And they got close to $3 billion for, what they are selling is about $900 million a year in sales between, not just the Nestle Crunch bar, but Butterfinger, Baby Ruth, Raisinets, Laffy Taffy, those are the brands under the Nestle umbrella. Also, KitKat is a global Nestle brand, but Hershey has the rights to sell KitKat here. So, you get those little bizarre combinations. They're just going to focus on the bigger fish, the growing parts of their market.

Hill: It might be the most profitable of those brands you mentioned. But, if it's not, I think the first thing Ferrero should do is shut down the Laffy Taffy division. Just save some money. Come on. That's not real candy. Come on. [laughs] Ferrero has Nutella, they have Tic Tacs, and now they have some serious U.S. candies coming into their portfolio. Focus on what's important, Ferrero! That's my advice. Ditch the Laffy Taffy.

Barker: Get rid of the Laffy Taffy? It bothers you for some reason. 

Hill: I mean, it's not good.

Barker: You got it stuck in your teeth a couple of times and you're still bitter.

Hill: I'm not bitter. I'm just saying, you come home at the end of the night on Halloween --

Barker: You just feel like a fool. You have this stuff stuck in your teeth, you're trying to pry it out, the kids are laughing at you, it's humiliating. I know what you're saying.

Hill: [laughs] You look at your bag of candy, you're going through it, you're telling me the first thing you're not ditching is Laffy Taffy? Of course it is!

Barker: There's no way. The first thing you're ditching are the Mary Janes.

Hill: I mean, those are the same thing. They're basically cousins.

Before we get to our final story, one housekeeping note, again, final call for summer interns 2018. We have internships available this summer here at The Motley Fool. If you're interested, we have analyst internships, we have tech, editorial. Go to careers.fool.com if you're interested in an internship, or if you have a child that you don't want hanging out at your house all summer. If you're one of those parents who's like, "What is my college kid going to be doing this summer? I have an idea, I'll see if they can get this internship with The Motley Fool."

Barker: What is this, summer camp?

Hill: No. From the parent's standpoint, it's like, "Please be busy this summer and get out of my house." And from the intern's standpoint, it's a great experience.

Barker: You have a kid returning from college this summer.

Hill: I do.

Barker: What have you made her do?

Hill: You know, at this point --

Barker: Ah hah!

Hill: [laughs] No, no, she's not interested in this. At this point, I'm just trying to get her focused on her new set of classes. New set of classes, new semester, let's see if we can do even better. Did really well first semester, let's see if we can do even better.

Barker: If you were going to help her get an internship, what would be a good one for her? What are her interests at this point, that she's revealed to you?

Hill: She's studying health sciences.

Barker: Not a very big field, that.

Hill: So I would be of virtually no help to her in that regard. I think the most I would be able to help her if she says, "I'm interested in an internship in health sciences," my response would be, "Oh, OK, you should go talk to your mother." I think that's the move there.

You can add Tiffany to the list of companies that had a good holiday. Overall increase in sales over the holidays was 8%, and same-store sales were up 5%, and shares of Tiffany up not a huge amount today, but they're up just enough that Tiffany is hitting a new high. New all-time high today for Tiffany. Well done!

Barker: Yes.

Hill: Did you spend any money there?

Barker: I did not. I have at some occasions in the past, but what they have for sale at the moment is not as much of interest to me as the stuff that's getting the headlines.

Hill: You mentioned the headlines. Here's what I think it's interesting. People think of Tiffany, they automatically and rightly think of the jewelry business and the little blue box and all of that branding. But the company is giving a decent amount of the credit for their holiday sales to a new collection of items for the home, accessories, that sort of thing, which include, among other things, a ruler, a silver ruler, that costs $450. And as far as I can tell, it does everything that a wooden ruler does, which is to say, it just measures things up to a very short distance. The difference being, a wooden ruler doesn't cost $450. And somehow, Tiffany is getting people to buy these things.

Barker: Yes. That and, a number of the other household, whatever it is, Everyday Objects. The one that got the most humorous attention was the $9,000 silver ball of yarn, which, in fact, does none of the things that an actual ball of yarn does, except exist in silver form, which is very, very hard to knit with.

Hill: You mentioned this to me earlier, and I'm still trying to wrap my head around it. How big is the ball of yarn, and what does it do? You're showing me a picture, which is of little consequence to the people listening, but this appears to be an average sized ball of yarn, but it's just made out of silver.

Barker: Yes. 

Hill: And that's it. I'm putting this on my mantle so that people who come over ...

Barker: Understand that I have that kind of money to throw away uselessly.

Hill: I have stupid money.

Barker: Yes, that's what it says. That's what you're saying to the people who come into your house. Do you have $9,000 to throw away on a useless silver ball of yarn?

Hill: I could have lit this money on fire. Instead, I did the next best thing -- I spent it on a $9,000 silver ball of yarn.

Barker: And it's not just a silver ball of yarn. There are lots of these everyday objects that you can flaunt your disposable income at people with. There's all sorts of things.

Hill: This reminded me of, you have talked before about your affinity for Bob Newhart, the tremendous comedian. Younger people will know him as Papa Elf in the movie Elf. People of our generation and older will know him from two highly successful television sitcoms. The $450 ruler reminded me of an episode of the first Bob Newhart show that, from a plot standpoint, is the only episode that I remember. I'm curious if you remember this. It's where Bob's wife buys him an expensive watch for his birthday. Do you remember this episode?

Barker: I don't.

Hill: For whatever reason, this is the episode that stuck with me, and I think it's because I identified with how Bob was feeling when he got this. It's his birthday, he doesn't like a big deal made about his birthday. His wife buys him a very expensive watch. He has a perfectly serviceable watch on his wrist. His wife buys him this expensive watch. And I think this is the first scene in the show. Then he goes to work, and he's chatting with Jerry the dentist, who's part of the office complex, because Bob is a psychiatrist. Right?

Barker: Yes.

Hill: And I forget the brand name, let's just say the expensive brand name is Barker, and Jerry is like, 'That's a Barker watch! That's amazing!" And Bob is like, "Yeah, it's really nice." And Jerry is like, "You don't understand. That's a Barker watch." And Bob is like, "Do you think she spent $100 on it?" And by the way, this episode takes place in 1973, so a $100 watch in 1973 is a healthily expensive watch. And Jerry is like, "Are you kidding me? That thing costs $1,300," and Bob almost passes out. And then when he goes back home at the end of the day, his wife is like, "Where's the watch?" And he's so terrified that he has a $1,300 watch around his wrist that he has not only taken it off his wrist, he has put it in a smaller box and put that box inside his briefcase, which is locked. And the line that I remember he says to his wife is, he's trying to say to her, "Can I return this? Can you take this back?" He says, "This watch does everything that my old watch does, but my old watch costs $10, I don't know why I need this." And that's what I thought of with the $450 ruler. There's a wooden ruler that I have in my house right now that does everything that this thing does.

Barker: Sure. But do you have a silver ball of yarn? Or a silver bird's nest for $10,000?

Hill: Are they selling that, too?

Barker: Yeah.

Hill: A bird's nest?

Barker: Yeah. You need one of those. If you find a bird's nest outside and bring it into the house, that's disgusting. Why would you do that? Your children could catch something. Put it back outside and replace it with something in silver. Just take out a loan to buy this $10,000 bird's nest. I'm going to reveal what I think is going on here. Because usually, when you mock something --

Hill: That's fine, because no one's listening.

Barker: When you and I mock something like Oreo flavors, they've gone out of control, or the candles at Bath & Body Works, and then somebody sends you one.

Hill: Nobody is sending --

Barker: I know that. I'm revealing that information to you. Like, "Oh, maybe someone will send me one of these rulers for $450."

Hill: Please don't. And no one would. No one would do that.

Barker: Your mockery of this is not intended to get you something?

Hill: No, it is not. Let's close on this --

Barker: You're smarter than I thought.

Hill: I was unaware of the $10,000 nest. Look, we have two items. And once you have stupid money, and you're going to spend stupid money on something insanely dumb like a silver ball of yarn or a silver nest -- which one do you think they do? The price difference is $1,000. So, do I spend $9,000 on the ball of yarn? Do I spend $10,000 on the nest? Which one do you think would get less ridicule? You have people coming over to your house, and you have this on your mantle, which one do you think makes people go, "Oh, that's interesting!" Or, would people walk away and say, "That's nuts!"

Barker: I think the nest is more interesting. It works better as art. It has little Tiffany robin's eggs, blue eggs in it. I don't know what they're made of, they're not made out of silver, they're made out of stone, I guess. I think as a piece of art, it works better than the ball of yarn, which is like a Monopoly piece.

Hill: I was going to say, if you shrunk it, it would look like a Monopoly piece.

Barker: Yeah.

Hill: You can read more from Bill Barker and his colleagues, for the three people still listening, go to foolfunds.com and check out with the Motley Fool Asset Management folks are working on. It's great stuff, and it's not a $450 ruler. It's the opposite of that.

Barker: Do you know what else is working for them, just to get a little actual business analysis here?

Hill: Now that I'm doing the wrap up?

Barker: Well, yeah. You went so far off topic with the Bob Newhart thing, I thought there would still be time to talk about their earnings report.

Hill: By all means. 

Barker: Part what helped here, and I only bring this up because I think it's going to be a theme that will come up at times over the quarter as earnings season really kicks in is, the weak dollar was a big help. It was an especially big help for Tiffany, because you have people coming in and shopping in the U.S. a lot of the time, and they want to, if they have a strong currency, Tiffany is sort of a destination shopping spot for them, especially the global flagship one in New York, which has had some problems with protesters outside of Trump Tower interfering with people getting in and out of Tiffany in a way that they wanted to. At any rate, you have a lot of foreign money that makes a lot of these purchases, and that one unit delivers a lot -- I can't remember what the percentage is, I'm going to say it's like 10% or 20% of the entire global sales. And when you have a weak dollar, this stuff, this is very discretionary purchases, a lot of the Tiffany stuff, the Everyday Objects, underlines to enormous degrees. You just don't buy things like this at times when money is tight. So, they're going to benefit, they did benefit, to about 2%. If you take out the foreign currency translation, their real same-store sales were up about 3%, rather than 5%. So, I just bring that up because that's going to be a thing this quarter and going forward -- part of what is helping some of the U.S. numbers is the weakness of the dollar.

Hill: That's a good point. I appreciate that.

Barker: It's not as interesting as that long Bob Newhart watch thing.

Hill: [laughs] It's much more relevant for investors, though. We're out of time. I should point out another huge piece of news today, which is Celgene possibly acquiring Juno. Big biotech news. We never got to that today. Here's the good news, though. Kristine Harjes is going to be covering that in spades on today's episode of Industry Focus. If you're not checking out the other daily podcast at The Motley Fool, Industry Focus, today is a great day to start doing that. Bill Barker, Motley Fool Asset Management, thanks for being here!

Barker: You should have put that little hint in at the beginning, so people knew which podcast to listen to today.

Hill: This is the reward for listeners who somehow managed to make it through all the way through to the end.

Barker: Got it!

Hill: As Dan Boyd shakes his head correctly. As always, people on the program may have interests in the stocks they talk about, and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. That's going to do it for this edition of Market Foolery. The show is mixed by Dan Boyd. I'm Chris Hill. Thanks for listening! We'll see you tomorrow!

Bill Barker owns shares of Apple. Chris Hill owns shares of Johnson & Johnson. The Motley Fool owns shares of and recommends Apple, Celgene, and Johnson & Johnson. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool recommends Juno Therapeutics. The Motley Fool has a disclosure policy.