Should I buy GE stock?

[Lillian McKenna]

I heard that GE recently sold its bio-pharma unit, is it advisable to buy the stock now?

[Simon Mugo]

Hi Lillian, the recent sale of GE's biopharma unit is great news for the conglomerate as it unlocks significant cashflow that the company can use to reduce its debilitating debt pile. The company has a debt load of about $121 billion and could use up to $20 billion of the $21 billion generated by the sale to pay off some of its outstanding debt.

However, GE's problems are far from over given that the company still has ling-term care insurance liabilities from its failed GE Capital business and these will take a while to play out. Some of its core businesses such as GE Power have experienced issues such as the mismanagement of orders and operations that are yet to be fixed.

Therefore, I'd advice you to be cautious with GE shares, you could buy a small amount to see how they play out, but the conglomerates future remains in the balance. It will take time for GE to recover its lost glory and you should be aware of this when buying the stock.