This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

General Electric Battles Perception

Stocks in this article: GE

General Electric (GE) CFO Keith Sherin called concerns about GE Capital "overdone" on Thursday, but concerns about the finance unit continue to weigh on analysts following the stock.

GE shares were relatively flat in trading Thursday, but are off more than 57% since the start of this year, much of it due to concerns about GE Capital. Critics fret the unit is not adequately capitalized to withstand potential hits to exposure to Eastern European and commercial real estate and other holdings, which the company has not marked down as aggressively as other finance companies.

"They have to come to where the rest of the world is on mark-to-market," says Sterne Agee analyst Nicholas Heymann.

Sherin, in a CNBC interview Thursday morning, acknowledged the company may lose its triple-A credit rating.

"We're getting a lot of speculation about the risk in GE Capital, obviously, and I think it's overdone," Sherin said on CNBC. "We can basically fund ourselves all the way through 2010 without any issues."

Analysts like Heymann are skeptical. GE is projecting losses on its private label credit card business on a model that assumes 9% unemployment. Heyman projects 11% unemployment by the end of the year and says that every 50 basis point increase in unemployment translates to $600 million less in net earnings.

Next, is the real estate issue. GE Capital has exposure in Eastern European countries like Hungary and Poland where the payback is now considered to be of very little value. Add to that the real estate decline in the U.K. and Ireland, where GE Capital was a big participant. In the commercial real estate portfolio, rent increases are slowing and actual rents are coming down and the company has yet to accurately reflect the true value of its holdings.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,804.80 +26.65 0.15%
S&P 500 2,070.65 +9.42 0.46%
NASDAQ 4,765.38 +16.9840 0.36%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs