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MarketFoolery: 03.16.2011

MarketFoolery

The Motley Fool

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4.71.7K Ratings

🗓️ 16 March 2011

⏱️ 10 minutes

🧾️ Download transcript

Summary

What does the disaster in Japan mean for U.S. companies with significant operations in Japan?

Transcript

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0:00.0

It's Wednesday, March 16th, and this is Market Fullery.

0:06.0

I'm Chris Hill and joining me in studio today from Motley Fool's stock advisor, Andy Cross,

0:10.5

for a million dollar portfolio Ron Gross, and Motley Fool asset management Bill Barker guys good to see you thanks Chris

0:16.6

Hey Chris it is day three of our focus on Japan and let's face it's not just us it's pretty much everyone the Nikk index rebounded up more

0:25.7

than 5 percent but all of the US indices are down thanks to continuing fears about

0:31.4

the nuclear crisis in Japan I want to pivot off of the

0:35.6

nuclear crisis and look at at least one of the companies, one of the big companies

0:40.6

that is being affected by this and that's GE. GE has a nuclear

0:45.0

service and parts business that produces about a billion dollars a year for that

0:49.8

company. They're looking to grow the business, sell some new reactors to countries around the world.

0:55.0

Ron Gross, how are those prospects looking now?

0:59.0

Not as strong. So a little perspective.

1:02.0

Three of the reactors at the Fukushima

1:04.8

Diachi, if I'm pronouncing that correctly, plant use a GE design. So obviously

1:10.0

from a publicity perspective of this is certainly not a good thing. The damaged in

1:17.5

unit one is actually a 40-year-old piece of equipment from GE. So again, not great in terms of wanting to build a business

1:26.9

and pivot off of the bad news that's happened. A little different perspective, the $1 dollar business is less than 1% of GE's revenue base.

1:37.2

So I don't see this having an effect at all on valuation and I don't think the business is actually

1:42.4

going to go away. It just might not be growing anytime soon because I think many countries around the world are going to have to revisit their nuclear strategy.

1:51.0

And as you said, I mean some of the countries around the world certainly are revisiting

1:55.2

their nuclear strategy, Germany, China, India?

2:03.0

I mean, these are countries that use nuclear power, but have also in the wake of this crisis, have put some degree of moratorium or hold on their planning process, their building process.

...

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