Ar­rival of new GE CEO sig­nals makeover

New Haven Register (New Haven, CT) - - BUSINESS -

power-gen­er­a­tion and oil mar­kets.

“If earn­ings and cash flow are go­ing even lower than we thought, the div­i­dend clearly should be cut,’’ an­a­lyst Jeff Sprague of Ver­ti­cal Re­search said in an Oct. 6 note. “GE could end up in bet­ter place once the dust set­tles but in­vestors should steer clear un­til we learn more. That bet­ter place could be with a start­ing point much lower for the stock price.’’

Gar­den, who works closely with Trian’s Nel­son Peltz, will re­place Robert Lane on the board, GE said in a state­ment Mon­day. The Bos­ton­based maker of jet en­gines, gas tur­bines and ul­tra­sound ma­chines main­tains “ac­tive and con­struc­tive di­a­logue” with Trian, ac­cord­ing to the state­ment.

“Like other GE share­hold­ers, I am dis­ap­pointed by the re­cent per­for­mance of GE’s stock,” Gar­den said in the state­ment. “But I con­tinue to be­lieve that GE rep­re­sents an at­trac­tive long-term in­vest­ment op­por­tu­nity with sig­nif­i­cant up­side.”

The shares fell 1 per­cent to $24.15 ahead of the start of reg­u­lar trad­ing in New York. GE has tum­bled 23 per­cent this year, putting it on track for the worst per­for­mance for a cal­en­dar year since 2008.

Gen­eral Elec­tric Co.’s new boss has barely ut­tered a word in pub­lic dur­ing his first two months on the job. But CEO John Flan­nery is al­ready sig­nal­ing his in­ten­tion to forge one of the most sweep­ing makeovers in the com­pany’s 125-year his­tory.

On Mon­day, he ac­cepted a board ap­point­ment for Ed Gar­den, a found­ing part­ner of ac­tivist share­holder Trian Fund Man­age­ment, which has been pres­sur­ing GE for an over­haul. That came three days af­ter the com­pany named a new chief fi­nan­cial of­fi­cer and an­nounced the exit of two high-pro­file ex­ec­u­tives. Flan­nery is also seek­ing deep cost cuts and weigh­ing port­fo­lio changes as he seeks to re­v­erse this year’s big­gest drop on the Dow Jones In­dus­trial Av­er­age.

Flan­nery, who last week also took on the chair­man ti­tle, may be poised to slash earn­ings ex­pec­ta­tions when he presents plans to re­vi­tal­ize the be­lea­guered man­u­fac­turer at a meet­ing sched­uled for Nov. 13. Even a div­i­dend cut is a pos­si­bil­ity, ac­cord­ing to Ver­ti­cal Re­search Part­ners, as GE con­tends with weak cash flows and slug­gish de­mand in the

Bloomberg Gen­eral Elec­tric CEO John Flan­nery speaks dur­ing a Bloomberg Tele­vi­sion in­ter­view in New York.

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