GE STOCK PLUNGES
Once-iconic co.’s woes piling up
Shares of General Electric, once the most valuable company in the country, plunged yesterday, following another disappointing earnings report and the disclosure of yet another federal investigation into the company, at one point sending shares into the single-digits.
“Fundamentally this is worse than expected on profits, with the same dynamics as prior quarters,” wrote JP Morgan in an analyst note yesterday. “There is plenty here to support our negative view.”
In a trifecta of bad news for investors yesterday morning, GE said it lost $2.63 per share in the third quarter, a greater decline than expected. GE also took a charge of $22 billion, largely tied to its power division, a write-down that the SEC is now investigating. And, GE said it will cut its dividend from 12 cents per share to just one cent per share, in a move designed to shore up the company’s cash flow.
New CEO Larry Culp also said GE’s power division will split in two.
“These actions are a start in bolstering GE for the road ahead. In the last month I have visited many of our primary business locations. Getting to know this company better from the inside has only strengthened my conviction that GE has considerable strengths,” Culp said. “The talent here is real, the technology is special. And the global reach of the GE brand and our relationships are truly impressive. But GE needs to change. Our team knows this.”
The decline in GE’s stock price in recent years has been unrelenting, with the once-blue chip industrial conglomerate falling to just over $10 per share at the end of trading yesterday. That is down from over $31 per share in 2016.
“We’re still just cautious, there’s just a lot of items that are uncertain,” said Jeff Windau, an analyst with Edward Jones. “We do look positively on aerospace and the health care business, those are doing well, but they’re offsetting some of the poor-performing businesses.“
Since GE announced its much-hyped move from the Connecticut suburbs to Boston, the company has had three CEOs and has seen its stock price fall by two-thirds.
A GE spokesman declined to comment on any implications for the company’s Fort Point headquarters, which remains under construction. GE had already shifted the building’s timeline, turning it into two phases that will be complete by 2021.