GE’s nightmare just got worse

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GE’s nightmare just got worse – Oct. 20, 2017

Jeff Immelt steps down as CEO of General Electric

General Electric, one of America’s iconic companies, is in deeper trouble than we realized.

GE’s third-quarter profit deteriorated more than Wall Street feared, and the company dimmed its forecast significantly. The bleak news sent GE’s beaten-down stock sinking another 7% in premarket trading on Friday.

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Things are so gloomy at GE (GE) that the company, which has already shrunk itself dramatically over the past decade, now plans to get rid of another $20 billion worth of businesses in the next two years to simplify its vast portfolio.

The disappointing news is deepening concerns on Wall Street that GE may have to cut its coveted dividend for the first time since the Great Recession.

John Flannery, the new CEO, called the quarter “very challenging,” especially because of the “difficult market” in GE’s power division.

Flannery, who took over for longtime CEO Jeff Immelt in the summer, is expected next month to detail deep cost-cutting moves that may include layoffs. Flannery said it should leave GE in a “better position in 2018 and beyond.”

GE’s new management team has already cut perks, grounding its fleet of corporate jets and eliminating company cars for top execs.

general electric stock ge

Related: What’s wrong with GE? This American icon is in ‘crisis mode’

GE’s profit tumbled 10% last quarter to $1.8 billion. After one-time adjustments, GE earned 29 cents a share, widely missing the Street’s view of 49 cents. Profit in GE’s power division, which makes systems for utility companies, plunged 51%.

One bright spot: GE said overall revenue jumped 14%, exceeding estimates.

But GE downgraded its 2017 earnings forecast by more than shareholders had been anticipating.

Coming into Friday, GE’s stock is down 25% this year, easily the worst performer in the Dow. The Dow itself is up 17% this year, and its leaders, Boeing (BA) and Caterpillar (CAT), have soared 66% and 41%, respectively.

CNNMoney (New York) First published October 20, 2017: 8:37 AM ET

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