The second quarter earnings warning from General Electric (GE) is increasing investor pressure on the company to shake things up. The biggest shake-up of all would be a complete break-up of the company into multiple spin-offs. The new CEO John Flannery does not even take over until August 1, and he is already under the gun and on the clock. The odds he will initiate some big moves early in his tenure went up after the stocks negative reaction to the poorly received forward guidance.
Here is the key takeaway from Seeking Alpha News:
"Outgoing CEO Jeff Immelt, hosting his last earnings conference call, said the recovery for the oil and gas market has been slower and more volatile than expected, and he expects results for GE's legacy business to be 'lower than previously anticipated... Given our outlook on oil and gas, we are trending to the bottom end of the range of $1.60-$1.70 EPS for the year.'"
The problem General Electric has is no matter how well a couple of divisions are performing they over shadowed by the weak performers thereby capping the stock price. John Flannery cannot fix this perception. And perception is reality in terms of stock performance.
