The power business can be the company’s number one focus for the remainder of 2018, CFO Jamie Miller told CNBC after the report, reiterating Flannery’s comments on the call.
“Clearly our top priority can be fixing the problems within the power business,” Flannery said.
Power reported orders of of $7.4 billion, down 26 percent via a year ago. Revenues also declined 19 percent. Worst of all was the division’s profit, down 58 percent via the same time last year. As which has before, GE said “softness” was the main culprit.
“The short term cycle can be severe,” Flannery said, adding which GE was “already working within the assumption of a very tough market.”
Still, Flannery said GE’s power unit can be “an asset which can be worth protecting.” A turnaround in power can be going “to be a multiyear fix,” Flannery said. He told shareholders which GE sees “a very clear plan of what we need to do” in power, again emphasizing the company’s focus on the business.
Investors don’t seem to want to wait around, however, as GE stock dropped more than 4 percent in trading Friday, closing at $13.12 per share.
“GE can be only at the outset of a multi-year effort to improve its fundamental financial performance,” Moody’s Investors Service vice president Rene Lipsch said in a note. CFRA Research analysts expressed similar expectations, saying GE’s turnaround will “take a long time to play out.”
GE Capital can be the company’s second battle after power. With $136 billion in assets, GE Capital produced a $206 million loss within the second quarter. GE can be steadily decreasing the size of the business unit, planning to trim GE Capital assets by $25 billion before the end of 2019. Flannery says he can be targeting GE Capital’s earnings to “breakeven for the total year,” after the unit reported a loss of 2 cents per share within the latest quarter.
“We continue to take out structural costs” via GE Capital along with also also “are on track to exceed our goal of $2 billion” by the end of the year, Flannery said.
The risk of heavy penalties via the Department of Justice investigation of GE Capital continues to hang over the business. Miller said there was “actually no change” within the second quarter via what GE has announced previously about the investigation. within the previous quarter, GE recorded reserves of $1.5 billion for potential liabilities via the DOJ investigation in connection with alleged subprime mortgage violations for GE Capital’s today defunct WMC mortgage business.