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GE Investor Update: How Will New CEO Right the Ship?

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GE Investor Update: How Will New CEO Right the Ship? PART 1 OF 5

General Electric to Give Key Investor Update on November 13

GE’s investor update

Industrial behemoth General Electric (GE) will announce its future plans at an investor update event on November 13, 2017, at 9:00 AM EST. GE’s CEO, John Flannery, along with other high-level executives will speak at the event.

General Electric has been in the spotlight for the past few quarters since the company began its transformation into a pure-play digital industrial company. Given the company’s recent dismal quarterly performances, it seems that restructuring has been an unending saga for GE.

General Electric to Give Key Investor Update on November 13

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GE stock price

The major task in front of GE’s new CEO is to restore the company’s stock price. Since January 1, 2017, the company’s stock price has fallen ~37%. Since the company disclosed its 3Q17 earnings on October 20, 2017, there has been a sharp drop in GE’s stock. The current stock price of $20.1 per share reflects the average stock price levels in the first quarter of 2011.

The year-to-date stock returns of GE’s peers are as follows:

  • Honeywell International (HON): 16.8%
  • 3M Company (MMM): 28.7%
  • Illinois Tool Works (ITW): 28.7%
  • United Technologies (UTX): 9.8%
  • Boeing (BA): 70.8%

The SPDR S&P 500 ETF Trust (SPY), a broad market indicator, has returned 16% since the beginning of 2017.

How will John Flannery proceed?

After taking over as CEO, John Flannery said he has been meeting a variety of GE customers, financers, division heads, and investors. Reshaping General Electric’s ailing business is indeed a herculean task.

The possible actions he could take include spinning off certain segments, cutting dividends, and selling off more assets. In the 3Q17 conference call, John Flannery said, “The Company has many strong franchises, but a number of other businesses which drain investment and management resources without the prospect of a substantial reward.”

In this short series ahead of GE’s investor update, we’ll explore the possible actions John Flannery could take towards turning the company around.

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