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“Larry Culp seems like the kinda guy who tell you ‘this is a good opportunity for you’ right before he fires you.” – Jason

Hey there carnivores,

Markets were down heavy on Wednesday thanks to looming COVID lockdowns.

Today we’re breaking down GE’s most recent quarter. 

Keep raging,

Jeff & Jason

 

Jump around

GE reported earnings yesterday, and you’re not going to believe this… the company actually made money. Imagine that.

$GE gained 4.5% during trading and 1.62% after hours, as the company bested analysts’ expectations. Adjusted EPS of six cents beat estimates of negative four cents, while revenue of $19.42B eclipsed the forecasted $18.73B. A live look at Larry Culp walking out of the earnings call.

These figures from Q3 are worse than Q3 2019, but, ya know… ‘rona. CEO Larry “The Stable Guy” Culp expects cash-flow gains to become the new normal, continuing into Q4 and beyond (2021).

Break it down

GE Capital, which lost $663M during Q3 last year (due to a one-time pretax charge), only lost $78M this past quarter, and even ended September with $15B in liquidity.

Aviation was like the kid on the school project who didn’t pull his weight. The (absolute) unit not only didn’t manage to break even, but posted a revenue that was 39% lower than Q3 2019. Orders were down 54% for the quarter, as the airline industry has been put in a body bag. On the plus-side, at least GE doesn’t make cruise ships.

GE’s renewable energy and power segments did their best to pick up the slack, growing 3% and 2% respectively from the year prior. Maybe aviation should’ve copied off of them on the test.

The bottom line…

While the company appears to be mounting a comeback of sorts, the fun is not being had by all.

Namely, 20k of its current and former employees. YTD, the company has let go or furloughed (the “it’s not you, it’s me” of terminations) 15k employees, primarily in its aviation division.

CEO Larry Culp stated that he expects another 5k to be let go by year-end, just in time for the holidays.

 

 

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☑️Is that a Tiffany? Tiffany is ready to sell itself (again), with the board agreeing to sell to LVMH for a lower price than initially expected. Should the deal close, it will end a months-long battle between the two.

Tiffany initially agreed to sell itself to the luxury maker before the ‘vid hit. Despite some mudslinging and lawyering up it appears the two sides are getting back in bed together. Everyone knows a couple like that…

LVMH, the owner of Louis Vuitton and Christian Dior will pay $131.50 per share for the jeweler, down from the original price of $135. Should’ve just gone to Jared instead. Tiffany will pay its shareholders a dividend of $0.58 a share, which will presumably come in that signature Tiffany box.

☑️Dropping the ball. The NBA’s revenue dropped 10% during the 2019-20 bubble season but it still managed to haul in $8.3B. The league lost $800M in gate receipts and $400M in sponsorships and merchandise as coronavirus kept fans from games. Thanks a lot, Rudy Gobert.

The league can expect more losses if fans can’t attend games during the upcoming season. Duh. Without fans, the league stands to lose a projected 40% in overall revenue, or approximately $4 billion.

☑️Built. Ford. Strong. Ford beat expectations on Wednesday, marking the first time anyone’s been impressed with Ford since the Model T. The company posted a net income of $2.4B in Q3. Over the same period last year, it only managed $400M.

Analysts missed the mark worse than that Kim Kardashian private island tweet. Ford made $3.6B in profit, or 65 cents per share, compared to the 19 cents per share that those lame ass analysts expected.

☑️Learning about yourself. Apple is diving into AI video, buying Vilynx, which analyzes a video’s visual, audio and text content to understand what the video is showing. Of course, someone could just watch it, which is the point of videos, after all.

Using Vilynx’s analysis, Apple could generate tags for videos, making them searchable. Look out, Sergey Brin.

The deal was worth around $50M. Vilynx uses its tech to power search and recommendations. A la Google. Ever heard of it? Vilynx touts the ability of its system to not only recognize items, but understand them. Seriously, had it never heard of Google?

Keep in mind that Apple and other big tech firms are currently facing scrutiny for this exact practice (read: buying up competitors before they can blossom into tech giants in their own right).

Author:
Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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