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Five Stories GE Wants You to Believe


But evidence isn't necessarily on company's side.

I just took a quick look through General Electric's (GE) recent investor presentation. Let me say up front that I've long been skeptical about this company's health, particularly because some people I respect have spent a great deal of time taking apart its financials in recent years. They've concluded that the firm is dangerously overleveraged through its GE Capital unit and that its financial presentation is misleading and inadequate.

With that proviso out of the way, I wanted to point out some of the assertions GE makes in its slides. The very first point on the leading "Key Messages" slide reads as follows:

1. GE Capital well run through this recession, will provide attractive long term returns

I find comments like that rather inappropriate in a company's own presentation. That's for analysts and investors to decide for themselves, based on the evidence.

Here are some of the presentation's other points:

2. After this cycle, GE Capital will emerge as competitively advantaged $400 billion business with attractive returns (2%+ ROI)

3. GE Capital is a strong franchise.

4. Capital Finance is safe and secure.

5. It's running with intensity.

I remember writing a high-school essay that I began with the words, "In his classic novel The Scarlet Letter, Nathaniel Hawthorne brilliantly..." Proudly I showed it to my father, an English professor. He took one look and told me, "Never write anything like that. The readers are immediately going to think you're trying to bull---- them. Just let your arguments speak for themselves."

There's a school of thought that if you say something enough you can make it the truth, regardless of the underlying facts. I'd suggest that if GE really wants investors to believe it's healthy, it should dispense with the amateurish and self-congratulatory headlines and stick with the facts. Too bad Sergeant Friday from Dragnet has yet to be reincarnated as a securities analyst.
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