GE's fossil fuels disaster gets uglier

General Electric remains mired in a cash crisis -- caused in large part by a ...

Posted: Jan 24, 2018 4:10 PM
Updated: Jan 24, 2018 4:10 PM

General Electric remains mired in a cash crisis -- caused in large part by a bad bet on fossil fuels.

Profit in GE's power division crashed by 88% during the final three months of 2017, the embattled company said on Wednesday.

GE also disclosed that the Securities and Exchange Commission is investigating the company's recent insurance losses and accounting tactics.

The steep decline in power was driven by slumping orders for giant turbines and generators used in coal and natural gas plants. GE also took a hit from a previously announced restructuring that will include 12,000 job cuts.

GE's power problems were sparked by years of bad deal making, especially under former CEO Jeff Immelt. Rather than invest heavily in renewable energy, GE doubled down on fossil fuels in 2015 by acquiring Alstom's power business, which makes coal-fueled turbines. GE has admitted that the $9.5 billion deal, its largest industrial deal ever, has suffered from the rise of solar and other renewable energy.

John Flannery, the new CEO, said during a conference call that power is an "important franchise going through a difficult period." He warned market challenges will continue.

The power slump contributed to GE's overall weaker-than-expected results during the fourth-quarter.

GE lost $9.6 billion last quarter, mostly because of its financial arm and the tax overhaul.

Related: GE's 'black box' mystery is freaking Wall Street out

GE has been in crisis mode for months, with shrinking cash flows forcing the giant company to halve its dividend, put long-held divisions up for sale and overhaul its board of directors. GE has even contemplated what was once unthinkable: an outright breakup of what uses to be America's most successful conglomerate.

"Our responsibility is to reshape this company and ensure that GE matters as much in the next century as it has in the past one," Flannery said.

The good news for hurting GE shareholders is the company's aviation and healthcare businesses performed better. Aviation orders climbed 11%, while orders for healthcare products like MRI machines gained 9%.

That allowed GE to stick by its forecast for 2018 earnings and cash flow -- a key metric of financial health.

"Our visibility and execution on cash is improving," Flannery said. He expects "deep cost reduction" and other moves to "position us for continued improvement in 2018."

GE shares ticked slightly higher Wednesday, bouncing off six-year lows. GE was the worst Dow stock in 2017, losing nearly half its value despite a boom in the overall stock market.

Wall Street is especially concerned about GE Capital, the lending arm that nearly destroyed the company during the financial crisis. While GE has sold off much of GE Capital, the parts that remain have caused problems.

GE Capital suffered a $6.4 billion loss during the fourth quarter due to worse-than-expected troubles in its insurance business.

Like other companies, GE said the federal tax overhaul will be a long-term positive. However, GE took $3.5 billion of charges last quarter due the tax law driven by writedowns of the company's tax credits.

West Lafayette
Few Clouds
82° wxIcon
Hi: 87° Lo: 65°
Feels Like: 85°
Kokomo
Overcast
73° wxIcon
Hi: 81° Lo: 63°
Feels Like: 73°
Rensselaer
Overcast
75° wxIcon
Hi: 82° Lo: 62°
Feels Like: 75°
Fowler
Overcast
75° wxIcon
Hi: 84° Lo: 63°
Feels Like: 75°
Williamsport
Scattered Clouds
82° wxIcon
Hi: 86° Lo: 64°
Feels Like: 84°
Crawfordsville
Broken Clouds
76° wxIcon
Hi: 86° Lo: 64°
Feels Like: 76°
Frankfort
Overcast
79° wxIcon
Hi: 84° Lo: 64°
Feels Like: 81°
Delphi
Overcast
76° wxIcon
Hi: 85° Lo: 64°
Feels Like: 76°
Monticello
Overcast
76° wxIcon
Hi: 83° Lo: 64°
Feels Like: 76°
Logansport
Overcast
75° wxIcon
Hi: 83° Lo: 63°
Feels Like: 75°
WLFI Radar
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Confirmed Cases: 49575

Reported Deaths: 2739
CountyConfirmedDeaths
Marion11812690
Lake5337247
Elkhart343257
Allen2867133
St. Joseph202569
Cass16439
Hamilton1629101
Hendricks1439100
Johnson1306118
Porter78038
Tippecanoe7439
Clark67144
Madison66864
Vanderburgh6296
LaPorte59727
Bartholomew59245
Howard58258
Kosciusko5654
Marshall5217
Noble49128
LaGrange4829
Jackson4773
Delaware46052
Boone45944
Hancock45736
Shelby43425
Floyd39144
Morgan32831
Monroe31528
Grant30226
Montgomery29720
Henry29316
Dubois2906
Clinton2882
White26810
Decatur25532
Lawrence25125
Dearborn24723
Vigo2408
Warrick23229
Harrison21722
Greene19132
Miami1892
Jennings17912
Putnam1708
DeKalb1634
Scott1628
Daviess15017
Wayne1496
Perry1409
Orange13623
Steuben1332
Franklin1278
Jasper1252
Ripley1247
Wabash1152
Carroll1122
Fayette1037
Gibson1032
Newton9910
Whitley995
Starke963
Huntington822
Randolph804
Wells791
Jefferson782
Fulton731
Jay680
Washington671
Pulaski661
Knox650
Clay644
Rush603
Owen511
Adams491
Posey490
Benton480
Spencer461
Sullivan451
Brown421
Blackford392
Fountain332
Crawford320
Tipton311
Switzerland280
Parke240
Martin220
Ohio210
Vermillion170
Warren151
Union130
Pike110
Unassigned0193

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events