General Electric Plunges 8% After Slashing Guidance

Tyler Durden's picture

While it may not have slashed its dividend, yet, General Electric shares plunged 8% in the pre-market after the company cut its 2017 profit forecast while its new CEO grapples with one of the deepest slumps in the iconic US manufacturer’s history. The company reported that adjusted earnings this year are expected to be only $1.05 to $1.10 per share, down over 30% from a previous range of $1.60 to $1.70 a share. This is also sharply lower than the sellside consensus of $1.54 a share.

For the current quarter, the industrial conglomerate and maker of jet engines and gas turbines reported adjusted Q3 EPS of 29 cents, nearly 50% below the 50 cent consensus estimate.

As Bloomberg reports, the revision underscores the severity of the challenges facing Chief Executive Officer John Flannery, who took over Jeffrey Immelt’s longtime post in August. With hurdles from poor cash flows to slumping power-generation markets, GE is by far the biggest loser on the Dow Jones Industrial Average this year and has seen a quarter of its market value evaporate.

The cut is the latest step in what is shaping up to be a dramatic repositioning of GE under its new leadership. Flannery this month welcomed a representative of activist investor Trian Fund Management to GE’s board and announced several management changes. He is seeking deep cost cuts and has said he will consider all options, including portfolio changes.

In addition to GE no longer using a "shadow" private jet for its CEO, not to mention slashing its fleets of private cars and other corporate perks as the WSJ infamously reported yesterday, expect thousands more in layoffs from what was once America's most iconic company, which in turn will follow to more complaints by the Fed about America's growing "qualified labor shortage." And now we wait news on the fate of the company's dividend which wall street expects to be "massively" cut.

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Max Damage's picture

Don't worry Tesla will make up the manufacturing shortfall. Buy Tesla. Just ask Janet

StackShinyStuff's picture

Remember when the "markets" used to give a shit about GE?

CPL's picture

Considering they own everything.  The only question is who holds 8% of the shares that just dropped and when is the funeral.  nyuck nyuck nyuck nyuck...

Byrond's picture

Just make RC cars bigger. Then Toys R US is Tesla.

 

NoDebt's picture

Obama leaves, Immelt leaves, tide goes out and everyone is shocked to discover nobody was paying attention to the underlying business that whole time.  The entire thing was propped up with funny accounting and government favors.

 

jcaz's picture

This all started with Welch-  someday people see thru all the BS that Welch used to "transform" GE,  realize that he destroyed GE with simple-minded accounting and lowest-cost management.   People who buy his books about management just feed into the myth-  Welch was among the first to realize that it's cheaper to tweek the numbers than evolve the business.   Any fool can cut costs and heads-  if Jack was for real, he would have fired himself.

Handful of Dust's picture

I remember the Obama's farce appointing Immelt as "Job Czar" and Immelt promptly shipped 25,000 GE jobs to China.

 

 

1 Alabama's picture

plus nobody got cloths on

lester1's picture

Quick, borrow some more cheap money from the Federal Reserve and buy back your stock !!

yogibear's picture

The Central Banks are already propping up the markets by buying stocks. They'll just have to buy more.

JailBanksters's picture

GE has more shonky Finance Subsid's than all the Banks combined.

And being shonky , have the most law suits.

And everytime they have a big law suit loss, they just change the name, reset, and start again.

So this loss probably means, they've been caught out again.

overmedicatedundersexed's picture

oh my will Immelt's golden parachute fail?? jack welch you let a ju bring GE to this.

totenkopf88's picture

The ougoing jew leaves the Irishman holding the bag

Byrond's picture

But Tesla is A-OK. Stock values are based on nonsense hype. GE is a bellwether. Get preppin!

D503's picture

Wait GE is making things other than financial manipulation? Facinating.

yogibear's picture

GE's Imelt was buying back stock.

Janet Yellen and William Dudley figure out a way to bail out this too big to fail company!

Grandad Grumps's picture

Immelt headed to the bunker??

Catullus's picture

You know you're in an economic boon times when the largest industrial manufacturer and capex recipient slashes earnings and people

 

GE's really problem is their pension bomb coming

Megaton Jim's picture

"GE, we bring good layoffs to life."

yogibear's picture

GE replaced many Americans with h1Bs,outsourced many parts of the company to India and elsewhere.

NoWayJose's picture

Don’t just look at the facts - but also consider the effects of such things. Most H1Bs can follow a checklist and do it as well as Americans. They can take a design and trim it for costs of production. But what is typically lacking is ‘innovation’ and ‘invention’. For companies like GE and 3M there used to be constant new and exciting products. Same thing with Apple. The age of ‘discovery’ is slowing down, and H1Bs and offshoring take part of that blame.

dgc0101's picture

Honestly, companies like GE became nothing more than systems integrators, where financial engineering and M&A became the only kind of innovation they cared about.

Having worked at GE Global Research years ago, I can assure everyone that GE is no longer the kind of company that dominated the early 20th century by actually doing internal R&D that actually had the potential for long term commercial benefit; R&D is more often viewed as nothing more than a cost-center, where most of the cutting edge R&D was done with academic partners or at various government labs. And today their focus is on the IoT, be it in manufacturing or on the battlefield. I don't see GE as a being dominant or even competent in that space either.

onthedeschutes's picture

If GE fails...the sun will go supernova and we will all die...We must bail out GE again, now!! - Hank Paulson

yogibear's picture

NY Fed head William Dudley, start pressing your buttons to buy GE along with the Apple, Intel and PG you have been buying!

ToSoft4Truth's picture

GE and GE staff  "... has been through enough"....  bailout. 

LawsofPhysics's picture

Excellent comment!  + a few TRILLION (i.e TARP/TALF).

1 Alabama's picture

why do I not see a logical conclusion here? Logic??

LawsofPhysics's picture

Critical thinking isn't your strong suit, no worries, let me help you out.

The conclusion is simple; all animals are created equal, it's just that some animals are "more equal" than others.

How are things at the NSA today troll?

shizzledizzle's picture

GE: Imagination at work... In Accounting. LOL

venturen's picture

I worked there....you don't know

surf2liv's picture

Don't know what?  GE Aerospace was in on initial Apollo contracts..  Most ppl here know Apollo is a fraud.  I was there for Trident 2, another fraud.. updating machine code from mid 70s..when it could have been done in C with test station ..Immelt's 2 planes, more fraud..GE did have a good credit union, however

jerry_theking_lawler's picture

Imagaccounting tm

venturen's picture

Hey they gave up being a corrupt bank...and Only banks are rewarded. Dumb move. Who doesn't want 100% banking and unlimited free credit line?

mily's picture

GE used to be a rock solid indicator of the business cycle: when GE went, it took everything everything with it, but this time is different, ctrl+p

http://stockcharts.com/h-sc/ui?s=GE&p=W&st=1995-01-02&en=(today)&id=p54616938449

yogibear's picture

In a central bank rigged environment it's totally different.

They cannot allow price discovery. Algo controlled.

Byrond's picture

Probably not different. Uh oh.

Yellow_Snow's picture

I remember when news like this would drag S&P futures down 12-15 points...

How times have changed

A. Boaty's picture

Do they still make nuclear warheads? Stirring up trouble with NK looks good for business.

FreeShitter's picture

Ge will eventually end up like sears.

bshirley1968's picture

This is the reason for the futures pump and "Tax cut" meme.

They can't even let the market drop on a GE miss. Damn!  The fall will be epic.

Byrond's picture

If GE could find a way to only sell online ads or get China to make overpriced phones for them, they would be fine. Or if they could sell stuff from China at a loss (that's you Amazon), they would be fine. Yes, they would be fine today. But GE can build nuclear bunkers today. So who's going to be fine tomorrow? Hoodies and ads don't accomplish much per se. 

ludwigvmises's picture

Anyone remember those GE earnings in early 2008 when it took down the whole maket 3.5%? Now, barely a mention anywhere of this disaster!

Byrond's picture

I was just scanning GE news for the last decade. This is the beginning of the end.

BadSpybot's picture

GE is a template for the fall of American industry. Fifty years ago, Schenectady GE employed over 30,000 people manufacturing large steam turbines and generators. Both my parents worked there and so did I for a few years. There were three shifts with many working overtime and making enough to support a whole family. Today, Schenectady looks like a worn out sick city.  Looking at Google satelite map reveals almost empty parking lots. There's really nothing left.  A country that makes nothing of value and simply moves paper around eventually devolves into a society where the most people work in part time low paying mindless jobs struggling to get by.  Welcome to Walmart, he says, forcing a pasty smile. GE's solution is to cut costs and lay off workers, whereas it should be finding new purpose and opportunity in making products and earining revenues. Meanwhile, I see stock price of $19 coming sooner than later.

yogibear's picture

US is the largest manufacturer of debt now.

BS and debt. Printing ever larger amounts of currency. Saying debt no longer matters. Lying about unemployment.

Twist the numbers so it all looks good.

Zimbabwe American style. 

Byrond's picture

If we're an industrialized, capitalist, consumer-based, high tech world, GE should be doing better than ever. As long as the economy is healthy. Maybe China is taking the place of GE. But probably not. But if the US is turning into a wealth-unequal country like Brazil, the economy will have degraded quite a bit. Take away the good manufacturing jobs, transform industry into service-based nonsense, and it all gets flushed into a gutter backed up with worthless raw sewage. 

Cardinal Fang's picture

The reason GE needed a chase plane was because their Bombardier Global Express aircraft were unreliable pieces of shit.

In an interesting twist, Bombardier went away from GE engines on their C series and went with Pratt, this also affected GE's bottom line.

Not sure why GE Engines was not a contender. I don't follow their line up.

Of course, the Pratt motor they went with is also a pos, but you guys will find that out later.

RandomAnglican's picture

Maybe Jeffrey Immelt should have paid more attention to business than to kissing Obama's butt.