As alternative energy encroaches on traditional power business models, margins could fall regardless of cost outs. GE remains a Sell until management can rightsize Power and meet goals for cost outs and free cash flow.
General Electric plans to cut 12,000 jobs in its power division as the industrial conglomerate's new CEO institutes sweeping changes and the company grapples with a decline in business for coal and natural gas products.
GE announced details for the upcoming quarterly dividend payment of $0.12 (a 50% hair cut) and, on the same day, disclosed that 12,000 people from the Power division (~20% of the operating segment's work force) are out of a job.
It also gave GE a larger installed base of plants to service. But the deal came just as demand for new power plants was slowing, in part due to competition from cost-competitive wind and solar systems.
Fitch Ratings has downgraded the Long- and Short-Term Issuer Default Ratings (IDRs) for General Electric Company (GE) and GE Capital Global Holdings, LLC (GE Capital) to 'A+' and 'F1' from 'AA-' and 'F1+'. The Rating Outlook is Negative ... The ...