Long-Term Organic Fixes Needed
General Electric (GE) was once a great company, but has fallen on hard times the past few years. The stock price has trended down 42% year to date. Some industrial competitors have increased stock prices this year: Honeywell (NYSE:HON) up 27% and Siemens (OTC:SMQFY) up 12%. Where does GE go from here?
CEO John Flannery's Nov. 13 presentation defining the strategic way ahead identified major issues and improvement plans. In my opinion, while 2018 will be a reset year, improved financial and execution performance may eventually occur but with uncertain timing.
The dividend was cut in half. This is a major blow to the small retail investors (about 34% of the stock holders). The current dividend payout exceeded the free cash flow. Obviously, that could not continue. Significant cash saved by cutting the dividend will most likely go to "restructuring" -- e.g., layoffs, facility closings and business sales.
