'Generally positive but mixed'. As shown below the rise in the backlog, the x1.3 equipment book to bill ratio and rise in regional orders across all geographies (even Europe was +3%) all sounds...positive.
So where does the 'mixed' come in? Well two-fold I think. First, look at the orders pricing above for the six major industrial segments of the company. I like pricing as an insight into the underlying strength of a business: all companies like to protect margins via pricing power. Well three out of the six segments were negative. That's fairly negative.
And then looking at the company's 2014 views and whilst 'value' is hoped to be a positive, 'mix' is a negative. The real driver is simplification aka cost cutting and potentially the remunerative sale/spin-off of businesses.
So 2014. Simplification is good for margins on the industrial side. With an anticipated 4-7% organic revenue growth there, 10-12% operating profit growth from this part of the business is again achievable.
announced in November that it was spinning off 20% of it. That simplification again.
GE shares have had a good last year. Of the current US$275bn market cap, I can justify getting on for 90% of that via the industrial unit. Awaiting the value of the spin-off is the key. US$7bn of earnings in 2014...I suggest that is likely to be worth more than the c. US$30bn needed to get up to the current market cap. No wonder the share jumped US$2 on the spin-off announcement in November.
For large companies, simplification is a key theme. On this basis the slightly cautious commentary regarding 2014 should be looked through. I like that US$26 resistance/support point to start to get involved.