Microsoft overtakes GE as top company
By Danielle Sessa
Bloomberg News Service
NEW YORK General Electric Co., beset by slowing growth and investor concern that it relies too much on short-term debt, lost its spot as the world's largest company by market value to Microsoft Corp.
A decline of $103 billion of value this year has sliced General Electric's worth to $295 billion.
Microsoft has shed $59.6 billion, lowering its market capitalization to $299 billion.
The slide in Fairfield, Conn.-based General Electric in the months after Jeffrey Immelt replaced Jack Welch as chief executive officer came as earnings slowed and investors said they were concerned the company hasn't disclosed enough about its more than 20 businesses.
"During the days of Jack Welch, no one asked for breakouts, they were fine with double-digit growth and there weren't any issues with regards to financial statements," said Clay Hoes, an analyst at American Express Financial Advisors, which owns 46 million General Electric shares. "Then all of a sudden you start getting the cracks in the armor on accounting issues and you can't just take it on blind faith anymore."
General Electric has ranked as the biggest company since April 3, 2000, when it passed Cisco Systems Inc.'s $524 billion. Cisco is now worth $107 billion. Only seven other U.S. companies have a market capitalization bigger than the $160 billion combined loss in market value this year at GE and Microsoft.
General Electric shares fell 15 cents to $29.70, bringing its loss for the year to 26 percent. Microsoft gained $1.03 to $55.25. The shares lost 17 percent this year.
General Electric has been penalized by slowing growth in a range of businesses and increased scrutiny of corporate accounting since Enron Corp.'s collapse last year. GE makes money from businesses including plastics, television and financial services in more than 100 countries.
General Electric has retired $23 billion, or almost 20 percent, of its commercial-paper debt this year after some investors and credit-rating companies urged it to reduce its reliance on such short-term IOUs.