Quarter. The company also cutting its forecast josh, you were in this stock a long time ago. Youve since been out. What do you make of the quarter and whats happened with the stock . So, im not getting back in but i would tell you if youre looking to sell, make you already had that opportunity, im watching the canned. I want to see how she goes out, because when you have a stock thats down almost 10 premarket and it gains back as much as it has in that day, psychologically youre just thinking like anyone that want to be out of this thing may have already gotten out maybe we saw the worst of the news that we expect to see all year this. Stock has been downtrending into the news its not like its a shock, and i think the reaction is more important than the anticipation. Did you miss your best chance to get in . I dont feel like theres any rush, but its just like do you want to put shorts on now that all of the bad news is now they kitchensinked it and it was worse than expectations but if youre running around saying ge is in such bad shape, yeah, we know. We get that. So whats next is the question maybe the dividend is next if they address that midnovember maybe thats the next shoe that potentially drops. We just dont know. And i think thats the final shoe if it drops the kitchen sink comment is being thrownout there a lot, and thats what a new ceo does, right . He comes in, he lowers guidance. He overhauls the csuite but there is a problem with the dividend which will be an overhang whether it gets cut or not its an overhang through the end of the year the other thing that i think will put pressure on this is tax law selling, and not every investor out there is a taxable investor, but enough of them are that with a stock like this and with gains that people have had this year, there will be tax law selling going into the end of the year, so for both of those reasons together, i wouldnt buy it here. Look, it will be relevant again. Were not, you know, consigning it to the dust bin of history. Just not for this year. Whats the bigger standout today . Is it the disappointment of the quarter and the outlook, or is it the reversal in the stock you have an 8 reversal. Its the reversal in the stock and i think it was pete that talked about somebody that stepped up and got 108,000 puts, just basically looking for some downside, and i think, scott, what i saw in the premarket because i i timed them from basically two hours before the market started trading right up until the market opened, 18 million shares changed hands a fair amount of it below 22 a share. Now, obviously for every buyer theres a seller, but and vice versa what we saw was big buying coming in as that Conference Call and the rest got going into the trading day today, so 18 million shares turning over. They needed about 10 million shares to hedge the puts that they bought. This could be a windfall if the stock just gets closed imagined it turned out. Its nelson peltz, and like updates in 13g other by the way, i bought your panic i bought your 10 million shares on the dip . Bill nygren with us earlier in the week, thought that the stock would go higher, that the worst was behind the company was looking forward, not back kevin oleary, what do you make of what were seeing today from ge, a rather remarkable turn in the stock, albeit still lower and not much to hang your hat on from the quarter clearly well, when i hear a stock taken out behind the barn and i hear it being shot right out of the gate when the market opens, i get really interested, so im a buyer today. I went two ways. I actually own the stock and i bought some calls, 2019 and to. 5 i think well get div cuts if im the new ceo and im going to talk about it in november, why not finish the kitchen sink story and complete the div what happens is a Shareholder Base into more guys like me. I dont care if they pay dividend or not. I see lots of activism in the next 24 months i so a good 20 , 25 upside on this story i think the stock trades down as low as 20 on the concept of tax law selling. Might happen ill buy some more i like a disaster. I like it when everybody absolutely hates it. I cant find even guys in my office that want to touch it thats a great sign for me. Wait a minute mr. Dividend himself tells me he doesnt care if they cut the dividend you bought the stock today on november 13th, 15th, whatever that date, is they could come back and say were cutting the dividend maybe the stock takes a tumble back to where you bought it from if not lower, kevin. No, no, no. If they cut the dividend, the stock is going up. Thats whats going to happen. Thats my assumption this thing is an unmitigated disaster and most hated name cant find anybody that likes it thats why i like it i dont know if i caught the bottom it may go to 19, who knows, but this story has asset value youre going to chop it up and makes lots of changes. I bet you can make 20 , 30 on this stock in 24 months. Rob youve been neutral on industrials and industrials are up in line with the market heres an example of a stock that didnt participate but if you look across the entire s p, you can see stocks that havent participated in that and thats where the opportunity lies within these lag yards as long as theres a catalyst to propel it forward. Kramer this morning, although, you know, fairly positive on flannery and thinks that John Flannery the ceo can turn the ship around, he gave a scathing critique of whats going on at ge lets listen to jim. I think the company was run like a country club. I think the company had very little accountability. I think the company, they paid the highest price for oil assets at the absolute top and sold finance at the absolute bottom and bought a secondrate Infrastructure Company in france and was not able to ration alize it because of the government they were one of the companies that i would say that did the single biggest kabuki act ive ever seen in my lifetime other than the companies that crossed the line directly, and i do not believe they did, but they played it as close as possible, and ive got to tell you, it was a disgrace all right so what do you guys make of that, right . Hes accurate. Jim didnt hold back at all. He certainly did not. Im not going to go as hard as he did in what seems to be a personality call on the company but they bought the baker hughes at the top of the market and sold out of their financial asset, near the low, not quite at the low but near the low so you can certainly say they have made missteps. I think the other thing that youve got to consider here is whether its jims damning critique or what were seeing here on the desk is there are a lot of dividendoriented funds out there that are basically going to say we dont want this in advance of what should be a dividend cut. Are they unsurmountable issues at ge thats what every investor needs to consider today. No, they are not unsurmountable. Its a question of when do you get in. Especially since we have a global synchronized recovery and they have an opportunity to participate in that. Theres no doubt. All right the number one analyst on industrials put out a note after poring through ges earnings today writing the bottom line is that there are more questions than answers jpmorgans steve tusa is live with us from new york city good to have you back. How is it going i wonder what you make of what you heard, what you were most surprised about in this quarter, if anything. Yes a couple key points. First of all, i respect John Flannery i think hes taking the right approach but he has a very high hill to climb. You know, theres a lot these guys need to do, and i want to simplify it for everybody because i think theres a lot of numbers being thrown around. Its obviously a very complex, maybe too complex for some sell side analysts to figure out, but theres a number being thrown around of 7 billion in annual cash flow. That is cash flow from operations, including cap x. That cap flow moves down to roughly 3 billion, and then with required pension contributions you are basically getting available cash flow this year of 1 billion compared to a Dividend Payment of 8 billion the stock recovered here a little bit because the cfo on the call talked about a couple billion dollars of structural headwinds that are depressing this years number in order to pay that dividend, you dont need a couple billion dollars of improvement, you need a multiple of that in order to just get to the dividend and then, oh, by the way, you need available cash to grow the business in the future number two on earnings, the real earnings here are still not 1. 05 to 1. 10 compared to the 2 they were expecting six months ago on a true gap basis youre looking at 65 cents of industrial earnings, so just to make those numbers kind of clear to people to how kind of bad this is, i know theres not so much modeling going on, but part of our job is to do that, and those are the facts. And so based on those facts, there is no way these guys are going to be able to maintain their dividend unless they sell assets which would ultimately be dilutive and if they cut the dividend it has to be a substantial cut, and if they do that, they are getting like a 2 dividend yield on what it should be, still with not a lot of available Free Cash Flow, and im not quite sure why thats so attractive to people in the common text of it Everything Else thats out in in the market. And youre saying on november 13th on this investor day that that is in fact whats going to happen they are going to cut the dividend i dont know if its going to happen on the november 13th day. I think if i kind of crawled into the board room here, i would be trying to engineer a soft landing which means, you know, reset, provide some hope and kind of get this news out over the next couple of weeks, so whether its monday morning, next wednesday, i dont know it will probably be sometime before that, because if i were John Flannery, i would want to get on stage on november 13th and, you know, talk about the future, not about, you know, pension contributions and all this other kind of stuff, so i think this is the start of that, but people are being very presumptuous in going out and using terms like 7 billion in cash flow. Its much worse than that this year no doubt theres no debate on that. Thats neighboring news, 7 billion. He said that number is, quote, horrible and not the new normal do you take issue with that . I mean, i agree with him its a pretty weak number i think that theres probably improvement off of that, but, again, lets be very clear 1 billion to 2 billion of actual Free Cash Flow, not seven, so whether thats the new normal or not, it has to improve multiples to be able to get it to a point where, you know, you have optionality to do something for the shareholder or remotely pay a dividend thats even cut from here, so i absolutely think that they will do things to improve cash flow and to improve earnings we certainly have earnings growing. I dont know any sell side analyst out there that doesnt have earnings growing. Thats objection lit default for anybody that does its business, when it troughs it has to grow, but this is not a kitchen sink this is an indication of the base level of the business and more importantly trends in the core businesses like power, oil and gas, renewables that are all under severe secular pressures right now. Its interesting. You list, you know, a few different major businesses of ge whereas ge seemed to, flannery clearly this morning seemed to single out power in the sense, and heres what he said. He said its a localized issue, not a sweeping thing across the whole company. It sounds like you disagree with that statement, that you say that this is a broader issue. No, no, no. Im saying obviously oil and gas, you know, the total mark in oil and gas is a fraction what have it was a couple years ago so not a lot of growth there longer term. For power, you know, the issue is you know, its a huge issue for them it was 5 billion of profits expected this year in power. Its a huge business you know, almost as big as aviation, okay so if this business is not going to bounce back and we are kind of resetting is and then going lower because of secular pressures, it does actually matter what power, you know, does Going Forward its a key lever in this argument that ge is at trough or how much we should pay for ge. In fact, power is probably relative to my peers power is probably i would think a 5 at this stage of the game 5 to 6 difference and on a 22 stock thats a huge debate and everything we got this quarter and everything were getting from our field work suggests that this quarter is an indication that its bad, and i believe its getting worse. You say its not a simple restructuring. Ge as we know it, 12 months from now, how different does it look . Is the conglomerate that weve all come to know and the quintessential conglomerate, how different does it look we put a note out a couple days ago basically talking about what we think the progression would be i absolutely agree with you know, with improving the portfolio. I do not think this portfolio is going to be in place a year from now, and, remember, you know, on a sum of the parts basis our number is 18 to 19 bucks so if you want to make it a breakup play and want to include pension overhangs, 115 billion finco and 10 tax rate, they sell receivables to ge capital for god knows what economic purpose, theres a lot of what i would call contingencies around this portfolio built up over the year that are now unwinding again, this is not a cyclical issue where, hey, a market went down and it will bounce back in a couple of years so whatever you do, you have to keep those contingencies in the back of your mind. Its a lot more complicated that, hey, its 1 so lets give it 20 times. Billnygren, one of the most respected Value Investors and hes beaten 90 of his peers over the last decade told us earlier this woke and i quote, this company will show much better than average growth and he owns this stock, that they have higher than average quality business eds most of their income comes from parts and services, so we think this is a business that deserves to get back to a market multiple if not a premium i mean, this is a great investor who is saying that is he missing something or maybe youre too negative . Look, you know, im just im just a kid from connecticut trying to do a bit of analysis here im not Warren Buffett or anything like that, but, you know, like i think the the bull case has always been high level that these are great businesses why are they generating 1 billion in cash flow this year if they are a great business and by the way this Services Business in power is under attack orders are down, you know, double digit strong and even the locomotive services, csx booked a 3 billion Service Contract through 2030 that they took out of their backlog services are under attack because of technology as well, so this is thats a statement that could have been made about jack welch in 1999, but i believe the game has changed here, and thats really what they are paying for is they are resetting to this level that is more normal, and, in fact, you know, it may not grow over the long term. It hasnt grown in a while so i dont know the guy but, you know, we can discuss my model, you know, my model says its going lower. I just bring it it up clearly as an example of an investor who thats what makes a market, right . Someone is on the other side, a well respected value guy. Sure. Who thinks that maybe the worst is behind ge thats the only reason to bring it up and to have that debate and maybe well have it with him sometime on this program. Absolutely. Ill you know, look, we can go and visit the power gen conference in vegas this december and sit down with our peers and competitors. Their peers make high single digit margins in power and were making 20 margins before this all unwound. How do you see sales down 4 in that business and profits down 50 . This is moving back to a more sustainable and normal level which is not cyclical. Its a secular pressure thats unwinding here. Finally before by let you run, ive got kevin oleary here on shark tank and im putting you in the tank. He bought the stock and thinks if you cut the dividend the stock actually goes up heres your moment in front of kevin oleary, what do you say yeah, i mean, it may goup o the day, but ultimately if they cut the dividend to 50 cents youre getting basically like a 2 group here. My group is yielding 2. 2, 2. 3 and growing its dividend 10 so i can pick any other one of my stocks and and still outperform kevin. Let me ask you a quick question about the dividend. I agree with much of your analysis and its well done, and i think a lot of people are already baking in a 1. 2 billion to 1. 5 billion Free Cash Flow in this story theres only one day to cut the dividend its going to be on the 13th theres no other option. I dont see how he doesnt own this problem if he doesnt throw that into the kitchen sink story that day do you agree, because if he doesnt cut div on the 13th absolutely. That div is not getting cut, so im waiting to hear that story. Yeah. I its not my point is its not on the 13th i think its going to be before the 13th so i wasnt saying its going to be after the 13th its definitely going to be before the 13th, like no doubt about it, and by the way, i dont think this stock is reflecting 2 billion of Free Cash Flow. Its a 200 billion market cap so i cant even really do that math but 100 times Free Cash Flow i dont think this is reflecting one to two times Free Cash Flow. I completely disagree with that. Steve, good to have you on thanks for spending time with us. Hey, guys, by the way, i know your former guest says he was number one since 2010, we crossed him this year. Just clarified him. Steve tusa joining us from jpmorgan. A question of whether the u. S. Is the best place to vest mr. Loeb also has a new pick thats jumping and thats all on halftime. And more from david fabers interview with question khoe John Flannery. The cash flow is horrible, 7 billion number, way off of our expectations, anyone evenings pectations thats not thats not the new normal 7 billion is not the new normal. Theres a number of steps were going to take to improve that in 2018 significantly and beyond. Alerts wouldnt you like one from the market when it might be time to buy or sell . With fidelitys realtime analytics, youll get clear, actionable alerts about potential Investment Opportunities in real time. Fidelity. Open an account today. Fidelity. Can i kick it . Yes you can can i kick it . Yes you can can i kick it . Yes you c