General Electric: So It’s Come to This

Admit it, you knew this was coming. General Electric (GE) announced that it would fire 12,000 workers in its power business–nearly 20% of the unit’s workers–as it seeks to drive down costs and turnaround the struggling business.


That power has been a big problem hasn’t been a secret. In fact, it’s one of the problem units that bearish analysts cite when explaining why GE will be stuck in the teens for a while. But GE also knows it needs to do something to make the unit more profitable, and so something it did. Unfortunately, CFRA Research’s Jim Corridorewrites that he’s”not certain these efforts will be enough” to turn around its power business…or GE for that matter:

GE will cut 12,000 jobs (roughly 18% of staff) from its Power Business, as part of an effort to cut $1 billion in structural costs out of Power. We see this move as part of GE’s overall strategy to cut costs and refocus on areas of strength. However, we are not certain these efforts will be enough to turn around Power, which has struggled with poor execution and demand shifts. We still feel GE has great assets and great technology, but we think that the company faces a long drawn out restructuring, and think it’s best to wait for signs of improvement before adding to positions.


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