General Electric (GE) continues to generate negative headlines, but these headlines ignore the long-term transition to a pure industrial player, and overrates the impact that GE Capital will have long-term on the company overall.
The most recent spate of negativity has been spearheaded by the disclosurethat GE Capital's legacy insurance business incurred a Q4 after-tax charge of $6.2 billion. Furthermore, GE Capital also will make statutory reserve contributions over a seven-year period amounting to approximately $15 billion. Add to that speculation that a break-up of the conglomerate is on the cards, with activist investor Nelson Peltz pushing for sales and spin-offs of many of its businesses, and it is small wonder that General Electric stock tanked 14% in five days.