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  1. #1
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    GE - Removal from Dow Average

    I know this has been expected for a while, but hard to see such a large company fall so far.

    I think chasing high-margins is a big part of the decline.

    Core products with lower to good margins are typically under-appreciated.

    Companies started thinking they could/should be getting 50% to 80% margins on new products, instead of the 20% to 40% of core products.

    Decisions are made to enter new markets (like GE Financing business), that ultimately cripple the company.

  2. Electrical/Wiring/Trolling Motors Moderator CatFan's Avatar
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    #2
    Early 90s to 12 or 15 years ago it was the biggest company in the market. Now it's one of the smallest in the Dow and may not have enough cash to pay a dividend. Not a pretty picture. The financial move was what really did them in.
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  3. Member
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    #3
    Chasing high margins instead of product quality is basically the new business plan these days. Make all you can quick and sell the bones. It really creates lots of issues besides the ones just with the company

  4. Member
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    #4
    GE even messed up their profitable business of servicing all the equipment they made.

    Medical, Industrial, Military, Aerospace, etc. equipment needs servicing. Instead of making a reasonable margin on selling the equipment, servicing the equipment, and selling parts, they tried to get very high margins on everything.

    Like you say, this is now the norm. For a little while, it may appear to work. However, it is not sustainable.

  5. Electrical/Wiring/Trolling Motors Moderator CatFan's Avatar
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    #5
    A lot of these scenarios are driven by day traders and stock market speculators looking for fast money.
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  6. Member
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    #6
    Pretty sad to see. I remember people use to say things like”that is a good company it’s not going anywhere” to describe companies like GE but nowadays things change so quickly even the big ones can get left behind. Hopefully they can recover and right the ship.