The Saturday issue of The Wall Street Journal described how the “weakness in its oil and gas” business has adversely affect General Electric Co. (GE) sales and profits. Revenues are down 6% while profits are down 5% this quarter (presumably with respect to the same numbers a year ago). “Activist” shareholders — those bloodsuckers who want companies to taken on debt and use the proceeds to buy back shares to juice up earnings per share (EPS) — want GE to take on $20 billion in debt to buy back shares. GE, whose primary mission it is to cater to these “activists”, announced it will buy back $4billion more of shares than originally planned — to make the 2016 total a whopping $22 billion.
GE also “reaffirmed” its 2018 EPS target of $2 per share. For context, this quarter, it earned 22 cents per share (or an annualized $0.88 per share).
GE CEO Jeff Immelt stated that “all of our compensation plans” are contingent on meeting the EPS target. And how does he plan to achieve this target, since profits are depressed? You guessed it — cost cuts.
In other words, to ensure the top brass gets its bonus, GE plans to lay off workers.