General Electric Co.’s stock plunge deepened as its top leaders failed to soothe shareholder concerns over their turnaround plan for the beleaguered icon of American business. Chief Executive Officer John Flannery acknowledged that it’s “show-me-time” for investors as the company seeks to show concrete results from the overhaul he outlined a day ago. In an interview Tuesday on CNBC, he said he wasn’t surprised by the negative stock reaction after “we disappointed people with some tough news” such as a dividend cut and a lower 2018 earnings forecast.
Flannery plans to focus GE on just three businesses—power, aviation and health-care equipment—while exiting others that have long defined the 125-year-old manufacturer. The highly anticipated plan stopped short of a full-scale breakup, leaving investors to question whether the recovery will come fast enough.“The bottom line is that Mr. Flannery’s plan fell short of the sweeping reset that investors were looking for,” Deane Dray, an analyst at RBC Capital Markets, said in a note to clients as he lowered his recommendation on GE and cut his target price. “The company’s turnaround will now be more protracted than previously anticipated.” GE sank 6 percent to $17.88 at 11:07 a.m. in New York after tumbling the most in eight years on Monday. The stock price is at its lowest intraday level in almost six years. Chief Financial Officer Jamie Miller also made a case for GE’s prospects during a presentation Tuesday at a Goldman Sachs Group Inc. conference, and Flannery plans to continue the Wall Street appeal Wednesday at UBS Group AG event. The company’s power business will probably face challenges through the end of the decade and the strong aviation market may begin to slow, said Jeff Sprague, an analyst at Vertical Research Partners. GE’s plans to reduce expenses are underwhelming, Sprague said in a note to clients. He cut his price target to $18 from $20. “We thought GE would set a much larger multi-year cost reduction target,” he said.