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GE falls to 9-year low below $12

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  • GE falls to 9-year low below $12

    General Electric shares fell below $12 per share for the first time since July 24, 2009, on Wednesday, plowing a new low for the stock this year as investors appear concerned about the embattled industrial company's turnaround plan.

    Shares of GE fell more than 2 percent in trading, slipping as low as $11.94 per share. The stock has fallen more than 11 percent this month, with its market value now at about $104 billion.

    GE continues on CEO John Flannery's plan to trim the company down to three core businesses: aviation, power and health care.

    Flannery said during GE's second-quarter earnings last month that he had "essentially" completed the "target of $20 billion of dispositions" he promised.

    GE was worth nearly $600 billion in August 2000 β€” a time when it was one of the most valuable companies in history. Its valuation slipped over the first decade of Jeff Immelt's tenure as CEO before taking a sharp hit during the 2009 financial crisis. But GE's value recovered to pre-crisis levels nearly as quickly, reaching as much as $300 billion by December 2015. Yet shareholder confidence began eroding sharply in January 2017, at about $31 per share.

    Immelt's time leading the company was defined by an unwillingness to hear bad news, over a dozen insiders revealed to The Wall Street Journal earlier this year. The overly optimistic CEO's behavior led to a number of consequences: Unrealistic financial goals, poorly timed acquisitions and even mismanagement of the company's cash. Since January 2017, shares have fallen nearly 60 percent as investors discovered a company pulled in multiple directions by its many businesses, under investigation by both the Department of Justice and the Securities and Exchange Commission and weighed down by a finance arm with about "zero equity value."

    GE's power business continues to bludgeon the company's earnings, with its most recent quarter showing a 58 percent fall in profits from the same period last year. A turnaround in power is going "to be a multiyear fix," Flannery said. He told shareholders that GE sees "a very clear plan of what we need to do" in power, again emphasizing the company's focus on the business.

    A report last week said GE is working with Credit Suisse bankers in preparation for a $1.5 billion sale of its power-conversion unit. If completed, that sale would represent less than half of what GE paid for the unit in 2011, according to the report.
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