US industry giant General Electric is expected to announce yet another austerity plan that will most likely involve the shedding of assets and more layoffs. It’s a move to regain investor confidence and productivity.
With its market capitalization down more than $100 billion (€86 billion) since January of this year, General Electric (GE) has been suffering after making losing bets on the energy sector, wrongly believing that the oil and gas business would grow indefinitely.
Ahead of an investor conference later on Monday, shareholders appear resigned to a cut in dividends, the first since 2009, as GE had only $7 billion in cash flow at the end of September and would have had to pay out $8 billion.
“There is no sacred cow,” newly appointed CEO John Flannery said about the need to cut costs and restructure. He will roll out a fresh plan to revive the company. Melius Research analyst Scott Davis said the company “needs to clean house as fast as possible.”
Flannery is expected to present an austerity plan that will include more layoffs, with the power generation business to be particularly hard hit.
The renewed belt-tightening will follow a $1-billion cost-cutting program this year and an announcement of $2 billion in cuts in 2018. Staff levels have already fallen by 11 percent to 295,000 globally as of the end of last year.
GE is also bound to close its research and development centers in Shanghai, Rio de Janeiro and Munich, leaving the firm with R&D facilities only in New York and Bangalore.
Selling a few business segments could bring GE a step closer toward its goal of shedding $20 billion in assets over the next two years.
Frontpage February 21, 2019