GE wrote down $22 billion in goodwill because the promised profits from power are now unlikely. Power services faced stiff competition in Saudi Arabia and elsewhere, and use of large power plants has declined, slowing repair revenue. But profits fell as demand for fossil power plants slowed in response to cheaper solar and wind systems. It argued it could boost margins and profits. GE took on much of that capability in 2015 with a $10-billion acquisition of power assets from Alstom SA. ![]() They had been up earlier after the results.įormer CEO John Flannery, who was on the job for just 14 months, said in June that GE would pare its focus to jet engines, power plants and renewable energy by disposing of its healthcare and Baker Hughes units, along with other restructuring already in the works.Ĭulp added on Tuesday that GE will put its gas turbine equipment and services businesses in a new unit, a move analysts said likely foreshadows the sale of other power assets, such as steam turbines, nuclear plants and power grids. GE shares were down 8.5 percent at $10.21. "My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging," Culp said in the results statement. Analysts viewed that positively, and Culp said there were no plans to raise equity capital, as some analysts had feared. GE all but eliminated its quarterly dividend of 12 cents a share to conserve $3.9 billion in cash. corporate history.Ĭulp, who took over on October 1, delivered more bad news on Tuesday: GE will significantly miss its full-year cash flow target of about $6 billion, and cannot estimate profits for the year until Culp gets more detail about its ailing power unit. ![]() corporation, is reeling from missteps that have eroded profits and forced it to announce more than $40 billion in writedowns in less than a year, among the largest such actions in U.S. GE's restructuring of Power comes as the 126-year-old company, once the most valuable U.S. Securities and Exchange Commission and Department of Justice had expanded ongoing investigations to include a $22-billion writedown of goodwill from GE's power division, which GE reported on Tuesday. General Electric slashed its quarterly dividend to a penny a share, promised to restructure its power unit and said it faced a deeper accounting probe as new Chief Executive Larry Culp took his first steps to revive the struggling conglomerate.
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