Will GE Stock be Helped by Apple, Qualcomm Collaboration?

NEW YORK (TheStreet) --General Electric (GE) announced on Monday that it is collaborating with Apple (AAPL) and Qualcomm (QCOM) in order to revitalize its lighting business.

GE will be working with a Qualcomm subsidiary, Qualcomm Atheros, to bring indoor positioning technology to major retailers, which will allow the retailers to pinpoint a shopper's location and use mobile apps to personalize the consumer's in-store experience.

By working with the chipmaker GE will use technology embedded in its new commercial LED bulbs that will create unique pulse patters to "talk" to shoppers' smartphones and tablets, GE said in a statement.

"Today's consumers want a customized experience-from the news they read, to the games they play, to the products they buy, they expect technology-driven personalization. Working with Qualcomm Atheros, GE is harnessing the power of our commercial LED lighting to give retailers the opportunity to create an enhanced experience for shoppers securely, while respecting their privacy," Jeff Bisberg, Global General Manager, Indoor Location, GE Lighting, said in a statement.

GE also announced a tie-up with iPhone maker Apple in which it will produce an LED bulb compatible with Apple's connected device platform. The Apple device has yet to launch.

"GE's plans to engineer intelligent, color-changing LED lighting compatible with Apple's HomeKit during GE's Connected Future event, unveiling LED-enabled intelligent environments capabilities for cities, buildings and homes, GE said in a statement.

Shares of GE are down by 0.13% to $27.27 in mid-day trading on Monday.

The collaborations with Qualcomm and Apple highlight GE's plan to jump into the emerging and highly competitive market for connected lighting that integrates with smart devices, Reuters reports.

Separately, TheStreet Ratings team rates GENERAL ELECTRIC CO as a Hold with a ratings score of C+. TheStreet Ratings Team has this to say about their recommendation:

"We rate GENERAL ELECTRIC CO (GE) a HOLD. The primary factors that have impacted our rating are mixed-some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. Among the primary strengths of the company is its expanding profit margins over time. At the same time, however, we also find weaknesses including deteriorating net income, generally higher debt management risk and disappointing return on equity."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • 35.71% is the gross profit margin for GENERAL ELECTRIC CO which we consider to be strong. Regardless of GE's high profit margin, it has managed to decrease from the same period last year.
  • Regardless of the drop in revenue, the company managed to outperform against the industry average of 15.5%. Since the same quarter one year prior, revenues fell by 12.4%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • In its most recent trading session, GE has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. We feel that the combination of its price rise over the last year and its current price-to-earnings ratio relative to its industry tend to reduce its upside potential.
  • The debt-to-equity ratio is very high at 3.24 and currently higher than the industry average, implying increased risk associated with the management of debt levels within the company.
  • Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. Compared to other companies in the Industrial Conglomerates industry and the overall market, GENERAL ELECTRIC CO's return on equity significantly trails that of both the industry average and the S&P 500.
  • You can view the full analysis from the report here: GE Ratings Report

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