I found 11 US Big Conglomerate Corps with Pretax Income of at least $100 mil in the most recent 4Q 2011 or in the 4Q 2010.
These 11 US Big Conglomerate Corps generated Total Pretax Income in the 4Q 2011 which was precisely flat from the 4Q 2010. This was a huge downtrend from the strong earnings growth of these US Big Conglomerates of the previous 7 quarters.
GE's 4Q 2011 Pretax earnings growth of 26% was very robust. However, nearly all of this growth was due to its Finance Sector, which generated 92% earnings growth in the 4Q 2011. This GE Finance Sector's earnings growth of $824 mil, comprised 88% of GE's total dollars of earnings growth of $936 mil in the 4Q 2011.
Below here are these 4Q 2011 Pretax Earnings (PTI), along with a comparison with the prior year’s quarter amounts.
...........................................................................Increase
................................................PTI........PTI.......(Decrease)
.................................................4Q.........4Q..................
...............................................2011......2010....Amount....%
.................................................(millions of dollars)
General Electric......................4,476.....3,540.......936.....26%
Berkshire Hathaway(1)...........3,900.....4,383......(483)...-11%
United Technologies...............1,832.....1,686........146.......9%
3M..........................................1,329.....1,262.........67.......5%
Honeywell(2)..........................1,145........930........215.....23%
Johnson Controls......................549........498..........51.....10%
Loews........................................481........945......(464)...-49%
Tyco Intl...................................412........653......(241)...-37%
TE Connectivity Ltd...................346........382........(36).....-9%
Ingersoll-Rand..........................273........255..........18.......7%
Leucadia National.......................63........300......(237)...-79%
Total all 11...........................14,806....14,834........(28)......0%
(1) Berkshire Hathaway PTI in both years exclude Insurance Investment Gains and Losses, Insurance Impairment Losses, Finance Investment Gains and Losses, and Finance Derivative Gains and Losses.
(2) Honeywell PTI in both years exclude Pension Expense from Mark-to-Market Changes.
The modest earnings growth in the 4Q 2011 for most of these US Conglomerates was due in no small part to the dramatic drop in consumer confidence and the marked increase in business uncertainty caused by the bumbling of the Republicans in the US Congress on both the Debt Ceiling Grand Bargain talks and the American Jobs Act.
I think it would be wise for the US Government to offer very robust tax and non-tax incentives to get some of these Conglomerates, operating in many sectors, to break up into parts. This will spark US job creation, as well as make these companies much more competitive and also much more profitable, in the aggregate.
