It’s no secret corporate America is sitting on a huge stash of cash these days, and investors are watching closely to see when/if/how they plan to spend it.
First, what not to do, according to my colleague Matt Phillips: use the extra cash to expand capacity. It seems investors are skittish about companies getting too gung-ho with the economy still on the mend.
But if investors don’t seem to crave aggressive business strategies, what’s a big cash-rich corporation to do?
General Electric offers one example. On Friday, the blue-chip announced it would raise its dividend by 20% and reinstate a share-buyback plan, the first dividend increase since the company slashed its dividend in early 2009.
GE shares have been reaping a short-term windfall from that decision. They’re up more than 5% in the past few days, an apparent vindication of an idea often overlooked by corporate chiefs: If you’re not going to spend all that cash, why not return it to shareholders?
READ THE FULL STORY HERE.
Wednesday, July 28, 2010
GE in Regulatory Hot Water
Three Former General Electric Bankers Are Indicted in Bid-Rigging Inquiry
Three former bankers with a General Electric Co. unit that sold investment contracts to state and local governments were indicted for conspiring to rig bidding to profit at taxpayers’ expense, the Justice Department said today.
Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all of whom once worked for finance units of General Electric, were charged with fraud and conspiracy, the Justice Department said. The three allegedly worked with brokers hired by local governments to solicit competitive bids for investment deals, in order to win the bidding and increase their profits.
“The individuals charged today allegedly participated in complex fraud schemes and conspiracies to manipulate what was supposed to be a competitive process,” Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division, said in a statement
GE to settle SEC charges of foreign bribery
General Electric agreed to pay $23.4 million on Tuesday to settle a Securities and Exchange Commission complaint, which alleges that GE bribed Iraqi government officials to win contracts to supply medical and water-purification equipment under the U.N. oil-for-food program.
The SEC alleges that two GE subsidiaries and two companies that the conglomerate later acquired paid $3.6 million in kickbacks to the Iraqi Health Ministry and Iraqi Oil Ministry for valuable contracts. The bribes, which are illegal under the Foreign Corrupt Practices Act, came in the form of cash, computer equipment, medical supplies and services, the SEC said.
The SEC alleges that two GE subsidiaries and two companies that the conglomerate later acquired paid $3.6 million in kickbacks to the Iraqi Health Ministry and Iraqi Oil Ministry for valuable contracts. The bribes, which are illegal under the Foreign Corrupt Practices Act, came in the form of cash, computer equipment, medical supplies and services, the SEC said.
Three former bankers with a General Electric Co. unit that sold investment contracts to state and local governments were indicted for conspiring to rig bidding to profit at taxpayers’ expense, the Justice Department said today.
Dominick P. Carollo, Steven E. Goldberg and Peter S. Grimm, all of whom once worked for finance units of General Electric, were charged with fraud and conspiracy, the Justice Department said. The three allegedly worked with brokers hired by local governments to solicit competitive bids for investment deals, in order to win the bidding and increase their profits.
“The individuals charged today allegedly participated in complex fraud schemes and conspiracies to manipulate what was supposed to be a competitive process,” Christine Varney, assistant attorney general in charge of the Department of Justice’s Antitrust Division, said in a statement
GE to settle SEC charges of foreign bribery
General Electric agreed to pay $23.4 million on Tuesday to settle a Securities and Exchange Commission complaint, which alleges that GE bribed Iraqi government officials to win contracts to supply medical and water-purification equipment under the U.N. oil-for-food program.
The SEC alleges that two GE subsidiaries and two companies that the conglomerate later acquired paid $3.6 million in kickbacks to the Iraqi Health Ministry and Iraqi Oil Ministry for valuable contracts. The bribes, which are illegal under the Foreign Corrupt Practices Act, came in the form of cash, computer equipment, medical supplies and services, the SEC said.
The SEC alleges that two GE subsidiaries and two companies that the conglomerate later acquired paid $3.6 million in kickbacks to the Iraqi Health Ministry and Iraqi Oil Ministry for valuable contracts. The bribes, which are illegal under the Foreign Corrupt Practices Act, came in the form of cash, computer equipment, medical supplies and services, the SEC said.
Immelt and Obama at Odds
GE finds itself on wrong side of Obama's defense agenda
For more than a year, General Electric has been notable among U.S. corporations for enjoying generally friendly relations with the White House. The company was broadly supportive of President Obama's stimulus efforts, and its chairman, Jeffrey Immelt, sits on a White House economic advisory board.
But now the White House and GE are clashing publicly over a fighter-jet engine -- built by the company and its British partner, Rolls-Royce -- that has been on the Pentagon's chopping block for years, only to be rescued repeatedly by Congress. The issue is poised to come to a head Tuesday during a House subcommittee markup for the annual defense appropriations bill, which Obama has threatened to veto if it has the $485 million for the engine.
GE -- whose financing arm received billions of dollars in federal bailout funds -- has launched a furious lobbying and media effort in recent months aimed at securing funding for the engine, which would serve as an alternate for Lockheed Martin's F-35 Joint Strike Fighter. Pratt & Whitney, the Pentagon's choice for developing an F-35 engine, has fired back with a lobbying and advertising campaign of its own.
For more than a year, General Electric has been notable among U.S. corporations for enjoying generally friendly relations with the White House. The company was broadly supportive of President Obama's stimulus efforts, and its chairman, Jeffrey Immelt, sits on a White House economic advisory board.
But now the White House and GE are clashing publicly over a fighter-jet engine -- built by the company and its British partner, Rolls-Royce -- that has been on the Pentagon's chopping block for years, only to be rescued repeatedly by Congress. The issue is poised to come to a head Tuesday during a House subcommittee markup for the annual defense appropriations bill, which Obama has threatened to veto if it has the $485 million for the engine.
GE -- whose financing arm received billions of dollars in federal bailout funds -- has launched a furious lobbying and media effort in recent months aimed at securing funding for the engine, which would serve as an alternate for Lockheed Martin's F-35 Joint Strike Fighter. Pratt & Whitney, the Pentagon's choice for developing an F-35 engine, has fired back with a lobbying and advertising campaign of its own.
Recent Market and Stock Performance
Wall Street jumps on GE data
General Electric delivered a shot of confidence to US investors when it raised its dividend, pushing the S&P 500 through the key 1,100 level.
The Dow Jones industrial average gained 102.32 points, or 0.99 percent, to 10,424.62. The Standard & Poor's 500 Index rose 8.99 points, or 0.82 percent, to 1,102.66. The Nasdaq Composite Index added 23.58 points, or 1.05 percent, to 2,269.47.
Crash In Hindsight: General Electric Currently 4.70% Above its May 6th Crash Low of $15.00 (GE)
General Electric (NYSE:GE) is currently trading 4.70% above its May 6th low of $15.00. Investors are looking to see if this 'flash crash' low can act as support signaling the stock has completed a bottoming process.
In the past 52-weeks, shares of General Electric have traded between a low of $11.25 and a high of $19.7 and are now at $15.71, which is 39.60% above that low price.
SmarTrend is bearish on shares of General Electric and our subscribers were alerted to Sell on May 06, 2010 at $16.58. The stock has fallen 5.2% since the alert was issued.
General Electric delivered a shot of confidence to US investors when it raised its dividend, pushing the S&P 500 through the key 1,100 level.
The Dow Jones industrial average gained 102.32 points, or 0.99 percent, to 10,424.62. The Standard & Poor's 500 Index rose 8.99 points, or 0.82 percent, to 1,102.66. The Nasdaq Composite Index added 23.58 points, or 1.05 percent, to 2,269.47.
Crash In Hindsight: General Electric Currently 4.70% Above its May 6th Crash Low of $15.00 (GE)
General Electric (NYSE:GE) is currently trading 4.70% above its May 6th low of $15.00. Investors are looking to see if this 'flash crash' low can act as support signaling the stock has completed a bottoming process.
In the past 52-weeks, shares of General Electric have traded between a low of $11.25 and a high of $19.7 and are now at $15.71, which is 39.60% above that low price.
SmarTrend is bearish on shares of General Electric and our subscribers were alerted to Sell on May 06, 2010 at $16.58. The stock has fallen 5.2% since the alert was issued.
