Pages: 17 (4208 mots) Publié le: 31 janvier 2011

UBS Wealth Management Research / 13 October 2008

Corporate Update
Lowered earnings bar met; Hold
Stock rating: Hold Share price: USD 21.50 USD 27 Estimated fair value range: USD 23 Issuer credit rating: AAA (Credit Trend: Stable) View versus MSCI US Capital Goods: Marketperform At a glance General Electric's 3Q 2008 EPS of USD 0.45 met the consensus. Weak results from the financialsegment offset healthy sales and order growth from the industrial units. We cut our 2008E-2009E EPS and EFVR (from USD 27-33 to USD 23-27). Our Hold/sector Marketperform ratings for GE's stock and 'AAA' credit rating/'Stable' credit trend for its bonds are unchanged. Stock view: Weaker outlook General Electric's 3Q 2008 earnings of USD 4.5bn fell 12% year-overyear. The finance unit's income dropped33%, hurt by higher loss provisions. Conversely, the industrial business posted solid organic sales growth of 10% and rising orders, which boosted the backlog 20%. Profits rose 31% at the Energy Infrastructure unit, as sales of power plant equipment rose; 10% at NBC Universal, which benefitted from the Summer Olympics; and 2% at Technology Infrastructure, which sells jet engines. Earnings declined82% at the Consumer and Industrial business, which makes lighting and large appliances. The company plans to spin off this unit in 2009. We lower our 2008E-2009E EPS (from USD 2.00-2.00 to USD 1.90-1.72) and our EFVR (from USD 27-33 to USD 23-27). We expect further finance segment weakness and moderating industrial growth through 2009. Credit view: AAA still We maintain our 'AAA' credit rating and'Stable' credit trend for General Electric. In our view, its robust credit quality reflects leading global market positions across a broad range of products and services, strong free cash flow generation, and financial flexibility. We believe the finance unit's business model remains sound despite our expectations for higher delinquencies and loan loss provisions in 2009, leading to lowerprofits. The company has taken prudent steps to improve its liquidity, such as issuing common and preferred stock, and reducing its reliance on commercial paper funding.

General Electric
Sector: Capital Goods Country: United States Lead analyst: bill.carroll@ubs.com, UBS FS

Stock price performance
General Electric

Source: UBS, 10 October 2008 Please note: past performance should not be seen asindicative of future performance

Corporate data
Equity and credit Share price (USD) Market cap. (USD/Mio) 52-week High/Low (USD) Reuters (Stock) Bloomberg (Stock/Bond) ISIN (Stock) Valor (Stock) Moody's S&P Fitch 21.50 213882 41.22 / 18.40 GE.N GE US US3696041033 933071 Aaa, STABLE AAA, STABLE

Source: UBS, Bloomberg (closing price), 10 October 2008

Past performance is no indication offuture performance. The market prices provided are closing prices on the respective principle stock exchange. This applies to all performance charts and tables in this publication.

This report has been prepared by UBS Financial Services Inc. ("UBS FS"). PLEASE SEE IMPORTANT DISCLAIMERS AND DISCLOSURES THAT BEGIN ON PAGE 2.

UBS Wealth Management Research / 13 October 2008

Methodology andrisk
Industry view: Neutral US Capital Goods We have a neutral position on Capital Goods in our US sector strategy. The sector benefits from its exposure to foreign sales, particularly in fast-growing Asian economies. However, we expect growth to moderate, both domestically and abroad, in some late-cycle end markets that have been performing well, such as aerospace and commercial building.Valuation methodology We derive the midpoint of our valuation, USD 25 (formerly USD 30), from a discounted-cash-flow model that assumes a 2.5% terminal growth rate and an 8.5% weighted average cost of capital (formerly 7.75%). The increased weighted average cost of capital reflects our view of the company's heightened risk profile, particularly related to its financial services segment. Applying a...
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