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Bloomberg
General Electric Co.’s new chief executive officer tried to reassure investors but the effort failed as a deep rout worsened and Wall Street’s confidence in the beleaguered company’s
future continued to collapse.
The shares tumbled as much as 10 percent as Larry Culp expressed a “sense of urgency†in cutting debt and selling assets. Speaking publicly for the first time since the company spooked investors with its third-quarter earnings report Oct. 30, he also said GE’s troubled power division had yet to hit bottom.
“We’re going to try to look at everything and all of our options again with a sense of urgency,†Culp told CNBC in a rare television interview.
The CEO’s failure to stem the stock decline underscored the crisis engulfing GE as weak demand for gas turbines, heavy debt and federal accounting probes fuel one of the deepest slumps in the company’s 126-year history. The shares have dropped more than 25 percent since Culp’s surprise appointment was announced October 1, extending a sell-off that has wiped out more than $200 billion in market value since the end of 2016.
GE sank 4.8 percent to $8.17 at 12:16 pm in New York amid a broad market decline. The shares earlier slid to as little as $7.72 for the lowest intraday price since March 2009, during the depths of the global recession. GE tumbled 51 percent this year through last week, the third-biggest drop on the S&P 500 Index.
ANALYST PESSIMISM
JPMorgan Chase & Co. cut its 12-month price target on GE last week to $6, the lowest on Wall Street, citing rising liabilities and a worsening outlook for cash flow after the company’s earnings reports October 30.
Credit Suisse Group AG cut its price target to $10 from $12 in a note to clients, saying there was little visibility into crucial numbers such as profit margins in the power operation and aviation division, which makes jet engines.
Culp said GE had many potential ways to cut debt. His predecessor, John Flannery, laid out plans to spin off the company’s medical-equipment business and sell its majority stake in oilfield supplier Baker Hughes. GE has other opportunities for asset sales as well, Culp said, declining to “negotiate in public†about specific deals.
“We have no higher priority right now than bringing those leverage levels down,’’ he said. GE Capital, which was hit by a $6.2 billion charge related to an old portfolio of long-term care insurance in last year’s fourth quarter, is another business dragging on the company.