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Hit financial storm ge enters conformity phase

date: 2019-08-28
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Recently general electric (hereinafter called GE) is facing an unprecedented storm.

On August 15, closing, ge's shares fell 11.4%, wiping out $8.98 billion (RMB 63.1 billion), the day appears bluffs type fall in share prices because, accounting experts Mr Markopolos issued a 175 - page report, accused ge financial fraud, fraud amount up to $38 billion.As a result, markopoulos has become more widely known, and is already well known on Wall Street.He made his name by ripping off Bernard madoff, one of the biggest financial frauds in American history.So the impact of the financial report was predictable, and ge was quick to rebut it.

175 pages of financial charges go straight to GE

In his detailed 175-page report, Mr. Markopolos enumerates several ge SINS: accounting irregularities involving $38 billion, or more than 54% of the company's latest market value;There is an $18.5bn gap in insurance reserves;The company hid huge loss rates, its true cash position was far worse than the company disclosed, and so on.

'This is the ninth insurance fraud my accounting team has handled in the past nine years, but it is the largest, bigger than enron and worldcom combined,' the report said.The $38 billion accounting fraud represents more than 40 percent of GE's market value, far worse than the accounting fraud at enron or worldcom.'

It is worth mentioning that GE changes the format of its reports every two to four years to prevent analysts from analyzing and comparing their reports at different points in time.All in all, according to markopolos, 'my team has been analyzing ge's accounts for the past seven months, and we believe that the $38 billion in fraud we have encountered is just the tip of the iceberg.'

The retort is that the report was fabricated

China industry news verified the incident and recently obtained a clarification report from GE.GE's response to markopolos' allegations in the financial statements included not meeting Mr. Markopolos and not having any kind of contact with him.It is widely known that the man worked for unnamed hedge funds and took their money, as the Wall Street journal has previously reported.These hedge funds are often driven by self-interest to try to short a company's stock and cause unnecessary market volatility.

Mr Markopoulos, however, has not denied that he was interested in moving the share price, following media reports that a mid-sized American hedge fund had paid him to investigate ge's finances.Clients of the fund received the reports before they were released and bet on a fall in the share price.

In the wake of the report, a number of GE board and management members increased their holdings of GE shares, signaling full confidence in the company's financial health and future.

The pace of integration of declining performance accelerated

GE is now the world's largest multinational provider of technology and services, from aircraft engines and power generation equipment to financial services, medical imaging and television programming to plastics, according to public records.Today, the company operates in more than 100 countries around the world. GE has been in China for more than a century, and the Chinese market has become an indispensable part of GE's market.Not all global markets are as stable as China's, however.

In corporate markets around the world, weak power businesses and higher-than-expected restructuring costs weighed on industrial giant general electric.A number of agencies have downgraded GE after slashing their earnings forecasts for 2017.Not only has GE suffered the worst performance slump in its history, but its market value has been shrinking to such an extent that it was officially kicked out of the dow in June 2018.On July 31, GE released its financial report for the second quarter ending June 30, 2019, showing another financial loss.

Larry culp, chairman and chief executive officer of GE global, said: 'the implementation of the company's top strategic objectives advanced steadily in the second quarter.Profit margins shrank, led by power generation and renewable energy groups and partly by aerospace groups, but remained in line with full-year forecasts for the first half of 2019.We generated non-cash goodwill impairment charges by integrating the grid solutions equipment and services business into the renewable energy group to provide clean energy solutions across the value chain and the grid solutions software business into the independently operated GE digital group.'

GE began to divest some non-core businesses from an active m&a company and refocus on the industrial sector. The strategy of business contraction began in April 2015.In the two years since, GE has sold most of its finance and appliances businesses.It also paid €9.7 billion for alstom's electricity grid business.GE sold its lighting business in June 2017;In September 2017, GE sold its industrial solutions business to ABB. In the same month, GE sold its water treatment and process treatment business.In 2018, GE's locomotive manufacturing business, industrial gas generator business and GE digital business were also sold.GE's biopharmaceutical and rail divisions were also sold in March 2019.

In February, ge announced plans to consolidate all of its renewable energy and grid assets into a simplified renewable energy business, increasing its focus on the growing renewable energy market.There are signs that GE is accelerating the pace of consolidation.

Journalist's notes:


There have been signs in recent years that GE, an industrial giant, is experiencing growth difficulties.Companies themselves feel the urgent need to make some big, targeted changes.Ge, which has been involved in a wide range of businesses, is looking to return to industrial manufacturing and integrate core businesses such as renewable energy.In fact, gm's transformation has been slow. It is not easy to turn around a huge ship that has sailed far in the red sea.History is not without its lessons. Both MOTOROLA and nokia were once leaders in the manufacturing sector, and there seemed to be no one to replace them at that time.However, the competition in the market is cruel, and it will be destructive for the enterprise to abandon the core business without seeking innovation.

Another warning to companies is to pay attention to credibility.Regardless of the authenticity of the markopolos financial report.To be sure, the long-term investigations that will begin will consume more energy from companies, another blow to investor confidence.It is reminiscent of the bankruptcy of enron, a well-known power, gas and telecoms firm, which faked its books.Enron's collapse was not just a matter of accounting fraud, nor was it all about corruption at the top.High profits brought by the risk, is obviously a wrong move, in recent years, the Japanese manufacturing enterprises fake news also make the industry surprised, Toshiba financial fraud, kobe steel product data fraud, mitsubishi materials two subsidiaries of the product data fraud.Historical experience and lessons are constantly ringing alarm bells, whether in the capital market or the real economy market reputation is the last lifeline of enterprises, Chinese manufacturing enterprises need to take warning.

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