GE - "bent the accounting rules beyond the breaking point"

Quality of Earnings a Persistent Question at GE

GE's stock continues to be discounted due to a perceived lack of quality in its Books.  The latest news will only increase Owners' concerns.

From the WSJ:

BY PAUL GLADER AND KARA SCANNELLGeneral Electric Co. agreed to pay a $50 million fine to the Securities and Exchange Commission to settle civil fraud and other charges that GE's financial statements in 2002 and 2003 misled investors. The fine settles a probe that started in 2005 into GE's accounting procedures, including financial hedges and revenue recognition. In a complaint filed with U.S. District Court in Connecticut, the SEC said the Fairfield, Conn., conglomerate used improper accounting methods to boost earnings or avoid disappointing investors. "GE bent the accounting rules beyond the breaking point," said Robert Khuzami, director of the SEC's Division of Enforcement.........

Readers will recall Gudovac's comments from 7 weeks ago: 

GE's books are not exactly 'high quality'. Management is doing its best to clean up its books, but the process (already under way for 4 years now) is going to take another few years. Management is skilled enough to unwind the dreck without a Enron type implosion. However, who wants to own a company that you know has questionable accounting ?

This situation will only increase Owner's unease with GE's books.  

Owner's should continue to assign a prudent discount to GE's price. 

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Don't Get Massacred !

Gudovac1941

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