The Key to General Electric's Stock Prospects
It's hard to understate the importance of General Electric Co.'s (NYSE: GE) power segment for investors. It's long been the company's core business, and given that CEO John Flannery's plans are to focus GE on power, healthcare, and aviation, it's clear his ability to return the ailing segment to form will be a key factor in any investment thesis around the stock. GE may well get power back on track, but if so, it's still going to take time, and it might not be as easy as many people think. Here's what you need to know.
A General Electric Company gas turbine in production. Image source: General Electric Company website.
First, the outlook and commentary from GE's investor update provides cause for concern. Flannery was candid in declaring that the energy assets it acquired from Alstom have "clearly performed below our expectation." Part of the problem was a downturn in demand for gas turbines -- hard to blame GE for that -- but equally worrying was Flannery's recognition that the acquired assets were "hurt by a very extended closing process and a lot of losses that were in some of the project businesses, especially in the renewable and some of the grid pieces."
Source: Fool.com