GE’s Cash Burn Should Be a Wake-Up Call
The company’s turnaround remains tenuous and investors would be wise to remember that.
It may get worse before it gets better,
Photographer: LOIC VENANCE/AFP/Getty Images
The truth hurts.
Free cash flow for General Electric Co.’s industrial businesses will be negative this year, down from a positive $4.5 billion in 2018, CEO Larry Culp said in a presentation on Tuesday at JPMorgan Chase & Co.’s Aviation, Transportation and Industrials Conference in New York. This was a danger I flagged a month ago, given the ongoing downturn in GE’s power unit and the associated restructuring obligations, loss of cash flow from divestitures and litany of one-time hits laid out by Culp on the company’s fourth-quarter earnings call. It was a reality that investors apparently needed to be hit over the head with before they acknowledged it, but they are starting to: GE shares fell more than 5 percent after Culp spoke.