GE is currently trading at $20/share. With a PE of 25. Our closes competitor Siemens is at $71/share and PE of 17.
GE (Earnings Per Share) EPS = (20/25)=$0.80
Siemens EPS = (71/17) = $4.17
In other words, to investors I’m better off buying a stock with a better earnings per share. So buy Siemens. If we assume in order for GE to reach a PE of 17.
Price of a share of GE would have to be =17 x .80 = $13.6
You might even say that GE has a more diversified portfolio. Pratt and Whitney is part of UTX that trades at a PE of 17 to. Warren Buffet didn’t even hold onto his GE stock. The KING OF BUY AND HOLD WARREN BUFFET DUMPED GE PREFFERED STOCK. So if invested in GE stock as a employee get ready for the rough ride down to $13.6.
Lets play with the numbers I heard you all love Six Sigma and lets go lean. In this game of Six Sigma “How much money does each employee actually contribute to each share of stock price? How many employees will GE have to fire to match Siemens?”
GE (EPS/#ofEmployees) = .80/300,000 =.00000267
Siemens (EPS/#ofEmployees) = 4.17/348,000 = .00001198
In order for GE to match seeing that business people run your life and your considered an expense just solve for y.
(.80/ y) = (4.17/348,000)
Y = ~68,000 employees needed to match Siemens
300000 – 68000 = 233,000 Pink Slips
The culture there is messed up. You took a business built on innovation and shear size and screwed it up. As a conglomerate from, plastics, entertainment, air and industry. How is just going industrial going? Your six sigma guru Jack Welch cutting and out sourcing leaning on financial to help drive the price of a stock per quarter. Ever read his book WINNING how is it working? A business built on numbers and white night managers has screwed you. The numbers above are scary for employees holding on shares for retirement and hypothetical lay off of 200k employees. So here is my honest candid point of view. If you going to be in power gen….IT BETTER BE THE BEST UNITS. If you are flying with a GE engine ….WHY WOULD YOU TEAM UP WITH PRATT AND WHITNEY IF YOU COULD DO IT YOURSELF. If the Indian government wants electric trains ……MAKE THEM ELECTRIC TRAINS. If your going to make electric batteries for industry …. EVERY HOUSE SHOULD HAVE GE BATTERIES FOR THERE SOLAR UNITS
Just commit to an idea and follow through. All your managers need to read Edward Deming’s 14 Points and 7 deadly sins of business. I don’t think Jobs or Bezzos had a problem committing where they were going.