General Electric Co. slashed its 2017 profit forecast as its new boss grapples with one of the deepest slumps in the beleaguered manufacturer's history.
The revision underscores the severity of the challenges facing Chief Executive Officer John Flannery, who took over Jeffrey Immelt's longtime post in August. Facing hurdles from poor cash flows to slumping power-generation markets, GE is by far the biggest loser on the Dow Jones Industrial Average this year and has seen a quarter of its market value evaporate.
"This was a very challenging quarter," Flannery said in a statement. "While a majority of our businesses had solid earnings performance, this was offset by a decline in Power performance in a difficult market."
Adjusted earnings this year are expected to be $1.05 to $1.10 a share, down from a previous range of $1.60 to $1.70 a share, GE said Friday in the statement. Analysts had anticipated $1.54 a share, according to the average of estimates compiled by
Bloomberg.
The cut is the latest step in what is shaping up to be a dramatic repositioning of GE under its new leadership. Flannery this month welcomed a representative of activist investor Trian Fund Management to GE's board and announced several management changes. He is seeking deep cost cuts and has said he will consider all options, including portfolio changes.
The shares tumbled 4.5 percent to $22.52 before the start of regular trading in New York. By 11 am Tuesday, the stock was off another 1 percent to $22.05.
The maker of jet engines and gas turbines reported adjusted profit of 29 cents a share for the third quarter, falling fall short of the 50 cent average of analysts' estimates compiled by Bloomberg.