Calling its results “horrible” and “unacceptable,” General Electric Co’s new chief executive vowed yesterday to shed more than $20bn worth of assets and hold executives accountable for failing to deliver profits.
His comments came as GE badly missed Wall Street expectations and slashed its full-year forecast, sending shares down 2.9% to $22.90.
GE’s good businesses are being held back by others that “drain investment and management resources without the prospect for a substantial reward,” chief executive John Flannery said on a conference with analysts.
“We will have a simpler, more focused portfolio” in coming months, he said. GE reported adjusted profit of 29 cents a share, missing by a wide margin the 49 cents analysts had expected, according to a consensus of estimates from Thomson Reuters I/B/E/S. GE cut its profit forecast for the full year to $1.05 to $1.10 a share, from $1.60 to $1.70 previously, and said it would generate only about $7bn in cash from operations, down from $12bn to $14bn it had forecast earlier.
It left its dividend unchanged. GE said weak performance in its power and oil and gas businesses, goodwill impairment and higher-than-expected restructuring costs were the main causes of the profit decline. GE’s “solid” performance in other businesses “was offset by a decline in power performance in a difficult market,” Flannery said.
Industrial cash flow from operations fell mainly “because of lower power volume, resulting in lower earnings and higher inventory.”
Profit at the GE power business, which makes power plants and related equipment, fell 51% in the quarter.
Cash flow from operating activities was $1.74bn in the quarter, down from $2.90bn a year earlier. Revenue rose 14.4% to $33.47bn, boosted by the acquisition of oilfield services provider Baker Hughes.

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