General Electric Co.’s stock price plunged Monday after Chief Executive Officer Larry Culp said the conglomerate is looking to sell assets with “urgency” to reduce its high debt and is unsure when its ailing power business will hit bottom.
“We have no higher priority right now than bringing leverage levels down,” Culp told CNBC. “We have plenty of opportunity to do that through asset sales.”
Culp said GE is trying to get “a better grounding in reality” in its ailing power business, which was responsible for its large loss in the third quarter.
GE shares (GE) were down 57.5 cents, or 6.7 percent, at $8.00 in late Monday trade on the New York Stock Exchange after falling as low as $7.72. In the past year, the stock hit a high of $20.75 and a low of $8.15.
Culp said GE was considering potential deals involving its “crown jewel” aviation unit, which shares technology with power, but such moves were not a high priority, Reuters explained.
“We wouldn’t say ‘no’ for all time to various options,” but breaking the unit out, monetizing it or raising equity were “not high on our list” of strategic moves, Culp said.
GE shares also plunged Friday after JPMorgan Chase & Co. analysts sharply cut their price target on the stock.
The price-target cut highlighted the deepening questions on Wall Street about the true worth of an industrial conglomerate that just two decades ago was the most-valuable U.S. stock, The Wall Street Journal reported.
The analysts, who cut their price target to $6 a share, shared a few reasons for their dimmed view of the stock: GE’s high leverage and little cash on hand, its disappointing third-quarter results and its slashed dividend, the Journal said.
Meanwhile, Forbes.com recently reported many General Electric (GE) retirees depend on the company for their pension and the stock for their portfolio. The stock woes have forced the retirees to contemplate selling the stock.
"The key decision you can control is how much of your GE stock you hold onto?" Forbes.com Contributor Ken Kam asked.
"The underfunded pension fund may worry you, but there is nothing you can do about it. In the worse case scenario, the Pension Benefit Guarantee Corp. (PBGC), a government agency, will take over GE's pension obligations. Check out this page to see what your maximum benefit might be if the PBGC steps in," Kam explained.
"The main reason to sell your GE stock is so that if the company does not turn things around, you are not put in a position of having your pension benefits reduced at the same time as your portfolio takes such a big hit that you can't recover from it," Kam advised retirees.
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