General Electric Co's chief executive surprised investors on Tuesday by for...
- General Electric Co’s chief executive surprised investors on Tuesday by forecasting a net cash outflow from its industrial businesses this year mainly due to its ailing power-plant unit, a gloomy outlook that sent shares and bonds tumbling.
The shock remark dealt a fresh blow to GE investors who have watched the Boston-based conglomerate slash its dividend as it took massive asset write-downs and huge insurance charges last year. The stock is up nearly 36 percent this year but is still worth less than a third of its value in mid-2016. The stock swiftly fell below $10, the company’s biggest intraday percentage drop in more than three months, which knocked more than $4 billion off GE’s market value. The shares closed 4.7 percent lower at $9.89 on Tuesday after falling as much as 7.6 percent.
GE’s bonds are rated three notches above junk and it is selling assets to reduce its high level of debt. Since then, GE has blamed the power unit’s losses, which totaled $22 billion last year, on its own poor management and a shift toward new wind and solar power plants. Culp said the power business would face headwinds for “a couple of years,” would not resolve problems with breaking power turbine blades for “a while” and promised to step up restructuring in the business and elsewhere. GE declined to provide restructuring cost estimates. The company is due to publish a financial forecast on March 14.
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