Can General Electric Company (NYSE:GE) Profitably Restructure?
Earlier this month, the General Electric Company (NYSE:GE) announced that Jeff Immelt had resigned from his position as Chairman of the board in order to pave way for John Flannery to assume the position. Mr. Flannery had already taken over the CEO position from Mr. Immelt in August, after which Mr. Immelt was to remain as Chairman of the company up to November.
The New CEO
Jack of All Trades
Where is the Stock Going?
As both CEO and Chairman of the board, John Flannery has his work cut out for him, a task that he is not taking lightly even as he does his research before revealing his strategy for the company’s future in November. GE needs to implement massive changes to its current operating structure in order to turn around its current negative performance.
The company’s stock has lost about 22.5% of its value in the past year as compared to the S&P 500, which has gained about 13% in the same period. The company’s performance also lags that of other manufacturers such as United Technologies Corporation (NYSE:UTX) and Siemens, the German manufacturer.
GE is a highly diversified conglomerate that operates in numerous industries, which makes it extremely difficult for the company to implement strategic changes as compared to other smaller companies. Nonetheless, the company is on track for a successful restructuring initiative having recently sold its water technologies unit to SUEZ in a bid to offload some of the company’s underperforming units.
The company is currently known as a jack-of-all-trades and a master of none having diversified into numerous industries, some of which are not profitable. John Flannery has to refocus the company on a few sectors where it has the highest chances of success ad profit, while at the same time reducing operating costs.
The company has been paying a stable dividend for many decades and some analysts opine that Mr. Flannery might have to cut the current dividend in order to solve some of the company’s cash flow problems.
However, investors and market analysts have to wait until mid-November when Mr. Flannery is expected to announce his plans for GE. In the meantime, you can download our custom report on the company to find out where we think this stock is going.
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