Gains Lost, Chinese Analysis, Ghosn Plans: CEO Daily for November 21, 2018
When Fortune’s Geoff Colvin wrote his brilliant takedown of the company in May—“What the Hell Happened at GE?”—the stock was trading just over $14, down about 50% from the day Jeff Immelt resigned the previous year. That, in turn, was down about 50% from when Immelt started the job back in 2002. Now, the stock has halved yet again, trading at around $7.60 a share. Surely, we are getting close to the bottom?
I’d be willing to bet yes—in part because it can’t go that much lower, but also because new CEO Larry Culp had such an impressive track record at Danaher. Moreover, while GE has a leverage problem, it doesn’t have a liquidity problem. And Culp has his eyes on assets that could contribute another $60 million to the balance sheet.
Bottom line: GE will emerge a much smaller company, but likely worth more than $7.60 a share.
Meanwhile, Fortune this morning is releasing a couple of deep dives from its December magazine. One is Phil Wahba’s colorful piece on Kohl’s CEO Michelle Gass, who earned the No. 4 spot on this year’s Businessperson of the Year list with her efforts to “own the middle”; the other is Adam Seessel’s piece about how Warren Buffett learned to love tech stocks.
CEO Daily is observing the Thanksgiving holiday tomorrow and Friday. If you’re in the U.S., enjoy the long weekend. See you back here on Monday.
More news below.
Yesterday's continued stock market slide wiped out all of 2018's gains, with the Dow falling 2.2% and the Nasdaq 1.7%. Over to Asia today, though, and the Hang Seng had a more chipper day with a 0.5% boost. The Shanghai Composite was also up 0.2%. The Nikkei? Not so much—0.3% down. Futures suggest a bouncy start to Wednesday over in the U.S. USA Today
Economists predicting the future of the Chinese economy should take the Communist Party and the state's interests into account, the Party has told brokerages and funds. Securities regulator chief Liu Shiyu didn't quite tell economists to censor their research, according to a report, but he did tell them to "strive for higher-level thinking." Bloomberg
China and WTO
Kevin Hassett, one of President Trump's top economic advisors, says China has "misbehaved" as a WTO member and could perhaps be "evicted" from the trade organization. "We never really envisioned that a country would enter the WTO and then behave the way that China has. It's a new thing for the WTO to have a member that is misbehaving so much," he said. BBC
Carlos Ghosn was reportedly planning to merge Nissan and Renault before his house of cards came tumbling down. Nissan's board was against the deal, but some apparently expected the merger announcement to come within months. In related news, Renault announced Ghosn's interim replacement as CEO and chairman yesterday: chief operating officer Thierry Bolloré. Financial Times
Around the Water Cooler
There was widespread outrage at the likely proposition of Russia's Alexander Prokopchuk taking the reins at Interpol, especially given the fact that he has frequently abused the Interpol "red notice" arrest-warrant system on behalf of President Putin. So today the International Criminal Police Organization, as it is more formally known, opted instead for South Korea's Kim Jong-yang. Kim will fill the seat involuntarily vacated by China's Meng Hongwei, who was reportedly arrested on bribery and misconduct charges in China two months ago. CNBC
JD.com's blockbuster Singles Day sales event was partly made possible this year by illegal student labor. According to the Financial Times, hundreds of training college students were forced to work 12-to-16-hour shifts, sometimes through the night, to package stuff for JD.com, or face not being allowed to graduate. Bonus fact: Singles Day was originally popularized by students, before JD.com got its hands on the "celebration." FT
Megyn Kelly, whose career at NBC is over thanks to her expressed sympathy for people donning blackface, may well walk away with a $69 million payout. That's the value of the remainder of the former Fox News-er's three-year contract. The deal may arrive next week. Bloomberg
Bowing to Amazon
Incoming Congresswoman Rashida Tlaib writes for Fortune that, while some in New York and Washington are outraged at the financial incentives offered to Amazon in exchange for part of its "HQ2," the concept is "nothing new" for those from Detroit. "We have an unfortunate history of political leaders bowing down to the demands of corporations with little community input and even less benefit to impacted communities," she writes. Fortune