General Electric (GE), the troubled industrial giant that has long been on a restructuring spree, seems to be trying new strategies to salvage itself from the crisis. After divesting most of the non-core businesses, the management is in the process of splitting the power business into two separate units – GE Gas Power and GE Power Portfolio.
The company is currently betting on one of its former executives to put things in order in the power division. John Rice, who retired from the company last year after holding various key positions, has been named the new chairman of the struggling segment. Reporting to CEO Lawrence Culp, Rice will be tasked with building the business while also keeping a tab on expenses.
Reporting to CEO Lawrence Culp, Rice will be tasked with building the business while keeping a tab on expenses
With the company’s stock continuing the free fall even after hitting a 15-year low, investors keep a close watch on even the smallest move by the management. Considering Rice’s extensive experience and in-depth knowledge of GE’s affairs, the market received his appointment with optimism. However, the ongoing restructuring efforts have hardly brought any solace to the long-term investors who have been waiting patiently for a meaningful improvement in market value.
The latest initiative includes reshuffling of the leadership team of the power division, assigning Scott Strazik the role of CEO of GE Gas Power and Russell Stokes the post of CEO of GE Power Portfolio. Both the executives used to lead GE Power earlier.
Earlier this week, GE shares witnessed their biggest fall in recent times, after analysts downgraded their rating on the century-old engineering juggernaut and cut the price target to as low as $6. The downgrade came after the company reported dismal results for the third quarter and slashed dividend to almost zero.
Analysts remain skeptical about the reorganization program kick-started by former CEO John Flannery, whose tenure lasted for just above a year, and carried forward by Culp. The ineffectiveness of the process indicates it might not be going in the right direction. The stock got a small push from Monday’s executive reshuffle and pared some of its recent losses.