General Electric Secures $1 Billion in Contracts and Boeing Has More Engine Problems
There is plenty of economic data for investors to digest today, including positive housing data mixed with a disappointing drop in consumer confidence in November. The Conference Board's Consumer Confidence Index fell from 72.4 in October to 70.4 in November; economists had expected a gain to 73. Meanwhile, the Commerce Department said the number of new housing permits increased to 6.2% last month, which was the best rate in more than five years. The Dow Jones Industrial Average is trading just 0.25% higher at 2:50 p.m. EST on the mixed news. Here are some companies making headlines.
General Electric is trading 0.52% higher today after confirming late Monday it secured contracts worth roughly $700 million with Saudi Electricity. General Electric will provide 12 combined cycle gas turbines, four steam turbines, and 16 generators for multiple power plants. It was the second major order from Saudi Electricity; Reuters reported Monday that the company had inked a $453 million maintenance agreement for more than a dozen gas turbines.
GE also said it is close to a solution for Boeing aircraft engines that are losing power briefly due to icing. The problem has occurred on roughly 400 engines that General Electric has produced for the Boeing 787 Dreamliner and 747-8, although it hasn't yet led to any significant problems,.
"If you were in the plane you wouldn't even notice it," General Electric spokesman Rick Kennedy said, according to ABC News.
Boeing has since told airlines not to fly planes with the engine within 50 nautical miles of storms that could lead to ice forming until GE updates the software that runs the engines. GE is confident the problem will be solved by a software update that only takes about an hour to install.
2015 Chevrolet Colorado. Photo credit: General Motors.
Outside of the Dow Jones Industrial Average, General Motors is jumping back into a vehicle segment Detroit has altogether abandoned. Ford abandoned the midsize truck segment and sent its Ranger overseas after the segment's sales plunged from more than 1 million units in 2000 to less than 270,000 trucks in 2012.
However, Detroit exit's left the door open for Japanese competitors to get their foot wedged in and create potentially loyal consumers to step up to their full-size pickups that have failed to gain traction. That's something General Motors aims to change when it launches the 2015 Chevrolet Colorado into showrooms next fall.
"It has that capable look, like there's no question that it can make it to wherever these active-lifestyle customers want to go," Ken Parkinson, executive director of Chevrolet design told Automotive News. "It looks great next to the new Silverado, yet it's very different."
The key for this to be a solid move for General Motors and its investors is all about pricing. If it drops the price too low, the automaker will cannibalize too many consumers from its most profitable model, the full-size Silverado. If there isn't enough price advantage versus current competitors, the Colorado might have face a tough comeback. The price gap between the Colorado and Silverado will likely be $6,000 to $8,000; that should hit the sweet spot to maximize sales on both ends, but only time will tell.
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Fool contributor Daniel Miller owns shares of General Motors. The Motley Fool recommends General Motors. The Motley Fool owns shares of General Electric Company. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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