GE Won't Sell Baker Hughes Stake Yet, Lowers 2018 Profit View -- Update
February 21 2018 - 6:02PM
Dow Jones News
By Thomas Gryta
General Electric Co. lowered its 2018 profit outlook Wednesday
and said it has no intention of selling down its majority stake in
oil services firm Baker Hughes before 2019, a shift from its
previous exploration of exiting the business.
GE combined its struggling oil and gas business with Baker
Hughes last year to form a new public company. As part of a major
restructuring of the industrial giant, new Chief Executive John
Flannery said in November that he would explore selling the stake
before restrictions lift in 2019.
"Given today's valuation levels, we see a lot of upside there,"
said Chief Financial Officer Jamie Miller at a Barclays conference
Wednesday. "At this point in time, we have no intent to change
anything or execute prior to the expiration of any of the lockup
periods."
Shares of Baker Hughes rose 1% on the news to $26.76. The
company has a market value of about $30 billion. GE owns about
two-thirds of the company.
Separately, Ms. Miller warned that 2018 earnings may be at the
lower end of previous guidance of $1 to $1.07.
"I think what you should expect is we're probably more at the
lower end of that range," she said, pointing to weaker results at
the company's GE Capital business.
Analysts already project a shortfall, but the company had backed
the earnings projection less than a month ago when it reported
fourth-quarter results. The average analyst profit estimate is 96
cents a share for the full year, according to Thomson Reuters.
Ms. Miller said the company continues to cooperate with an
investigation by the Securities and Exchange Commission into
certain revenue recognition practices and a recent review of its
insurance business.
She said the company will have face-to-face meetings with the
regulator next month, but that the timeline for a resolution isn't
clear.
Since taking the reins as CEO in August, Mr. Flannery has cut
the dividend and financial projections while pledging to shed at
least $20 billion in assets. Mr. Flannery says he wants to simplify
the company and is also considering bigger moves including
separating the core divisions -- health care, aviation and power --
in what would amount to a breakup of the industrial giant.
GE is working on more than 20 deals to rearrange its portfolio
of businesses. It expects to cut costs by more than $2 billion in
2018 -- more than the $1.7 billion cut in 2017 -- and will soon
announce a revamped board of directors.
Write to Thomas Gryta at thomas.gryta@wsj.com
(END) Dow Jones Newswires
February 21, 2018 17:47 ET (22:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
GE Aerospace (NYSE:GE)
Historical Stock Chart
From Aug 2024 to Sep 2024
GE Aerospace (NYSE:GE)
Historical Stock Chart
From Sep 2023 to Sep 2024