Opening up the black box…

November 3, 2003

Lots of investors love General Electric (GE) . But the company has often been criticized for having a black box when it comes to their earnings, making it hard for pros, let alone individual investors, to figure out where the money was coming from and going to. Under CEO Jeff Immelt, the company has been making efforts to make its financials easier to understand. And it is working. But, for now, at least, it does mean more paper — lots more paper — for investors. The 10-Q that GE filed late Friday is three times as large as the one GE filed for its third quarter last year. A good chunk of that is taken up by GE’s discussion of its off-balance sheet arrangements. Even though the company was not required to provide details on this until next quarter due to a last-minute change by FASB, GE disclosed that it was moving $36.3 billion back onto its balance sheet. That might seem like a big number, but given GE’s size, it’s relatively small. Indeed, the rule change accounted for about 1 percent of quarterly revenues and less than 1 percent of expenses. GE also provided more details on its business segments and a lot more detail on its fianancial services unit, by far the biggest part of the black hole.

Leave a Reply

You must be logged in to post a comment.