GE profit slumps by 60%, investors await new CEO’s targets

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General Electric Co’s (GE.N) profit fell nearly 60 percent in the second quarter and it put off an expected “reset” of 2018 earnings targets until November, sending shares down sharply.

The maker of power plants, jet engines, medical scanners and other industrial equipment said its profit and sales declines largely reflected sale of its appliances business, and it affirmed its full-year forecast for cash flow, profit, revenue and operating margin. However, it expects full-year profit and cash flow to be at the low end of its forecasts, according to Reuters.

GE said it would update its 2018 earnings target of $2 a share in November, later than analysts had expected. Analyst consensus 2018 estimate is $1.73, according to Thomson Reuters I/B/E/S. “Until this earnings reset plays out, the stock will essentially remain in a state of limbo,” Deane Dray, an analyst at RBC Capital Markets, said in a note. Incoming CEO John Flannery acknowledged his review would take time, but it was under way and wasn’t altering GE’s operations or 2017 outlook. “I’m not worried that we’re going to be dead in the water in the meantime,” he said.

Shares were down 4.1 percent at $25.58 in early trading.

GE faced a “slow-growth, volatile environment” in the quarter, Chief Executive Jeff Immelt said in his final earnings release before his Aug. 1 retirement, when GE healthcare chief Flannery takes over.

Immelt’s tenure began days before the Sept. 11, 2001, terrorist attacks and included the 2008 financial crisis. While GE stock is 27 percent below its price when Immelt arrived, it has more than tripled from its nadir in 2009.

Immelt sold off NBCUniversal, appliances and most of GE Capital. He acquired power assets from Alstom (ALSO.PA) of France, merged GE’s oil and gas business with Baker Hughes, and moved the headquarters to Boston.

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