GE Misses: Big losses on wind turbines continues

GE Misses: Big losses on wind turbines continues

Its ironic but green energy wind turbines seems especially sensitive to inflation. I think the blades are mostly fiberglass. Resin comes from oil. So double hit on rising oil prices. Shipping and raw materials.

The fundamental problem is inadequate cost escalator clauses in contracts with long lead time. No doubt they are fixing that for the future but then when you sign a contract its like a blank check. You don’t know what final cost will be. A paradox that makes installing green energy especially sensitive to inflation.

GE has spun off its health care MRI business. Next to go next year is energy including wind turbines and presumably their used to be very profitable coal fired powerplant business.

Now it looks like GE will become their jet engine business. A true jewel. I can’t wait.

Article also mentions disappointing earnings at 3M (expected. Big bill for forever chemicals shut down. Also at Raytheon. A bit of a surprise.

And Serta is declaring bankruptcy due to rising interest rates making a 2020 restructuring costly.


Excuse the pun but that cuts both ways. As alternatives make oil less expensive alternatives become less expensive. Longer term.

This almost took Westinghouse upside down in the 70’s. (Real estate finally did it in the 90’s). In order to sell their nuclear plants, the only way it looked cost effective is if the price of uranium was stable - and low - going into the future.

Since it had been stable, no reason to think it wouldn’t always be right? Heh. The smart guys entered into a bunch of fix price contracts for the next decades and suddenly, whoops, the price of uranium skyrocketed. (I don’t know the reason, I just know that it did.)

Next thing you know, the company realizes it’s in deep doo doo, and they pulled every plug they could for years until the price of the precious ore stabilized and finally returned to earth.

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GE reminds me of Eastman Kodak. Their color photography business was very profitable. When replaced by electronics they could follow but competition was stiff and business not nearly as profitable. Efforts to develop other business lines to replace photography didn’t well enough. So Business tanked.

GE power equipment went though the same situation. For a while finance saved the day but it faded.

Maybe the aviation business in jet engines will be a better future for them.

Scuttlebutt out of PW their engine designs maybe coming to dominate the market civilian and military these days. The latest military jet engine with modifications is being accepted by the Pentagon for different jet designs in more than one branch of the services.

iirc, GE has a European JV that makes jet engines too. As Boeing seems to be less interested in competing in the commercial sector, surrendering market share to Airbus, that might be good for GE’s EU JV, and bad for Pratt…or maybe not.

In case you missed it, Boeing’s quarterly was “worse than expected”, again. For the year, BA managed to lose another $5B, and add nearly $900M to negative equity.

For the quarter Boeing reported:

  • Revenue: $19.80 billion vs. $20.02 billion*

  • Adjusted EPS: ($1.75) vs. $0.17 est.*

Its been a tough time for Boeing. 737max. Lots of borrowing to keep workers while planes sat in inventory and could not be sold. And then Covid shuts down airline demand.

Yes, they have losses and rising interest rates make servicing debt more costly. At least they have achieved positive cash flow. They do have nice order backlog. And airlines complain about log lead time to get delivery. Forcing them to fly older p!anes more expensive to operate.

Fortunately Airbus is the only competition to worry about. Russia not so much. China seems to be working on making a challenge.

I always thought that Kodak should have just continued to hold their patents and IP and turn themselves into a shell that simply paid out that income stream as dividends and eventually folding their business gracefully (and profitably). All this attempt at growth is what killed them.

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