Dow closes lower on General Electric's stock drop

Lena Tucker
July 22, 2017

USA markets opened lower on Friday, weighed down by weaker-than-expected earnings from General Electric. It'll be longtime CEO Jeffrey Immelt's last chance to seal his legacy at the company before stepping down at the end of the month.

GE also said it would update its 2018 earnings target of $2 a share in November, later than analysts had expected.

The former head of GE Healthcare, Flannery outlined the review he's undertaking when his promotion to the company's top job was announced in mid-June.

GE shares have dropped 16 percent since the beginning of the year, while the Standard & Poor's 500 index has risen 10 percent.

In a statement on Friday, Immelt said: "We're looking forward to a smooth transition of the CEO position on August 1, when John Flannery becomes CEO".

Shares of GE were up more than 1 percent in premarket immediately after the announcement, then fell slightly to trade little changed.

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"We've reduced our Industrial structural costs year to date by $670 million and we are on track to meet or exceed our $1 billion cost reduction target for the year", Chairman and CEO Jeff Immelt said in an earnings release.

Immelt sold off NBCUniversal, appliances and most of GE Capital.

Flannery said he is "in the middle of a series of deep dives into the businesses".

Moody's reported adjusted earnings of $1.51 per share on $1 billion in revenue, compared to the consensus estimates of $1.34 per share and $959.2 million in revenue. GE set off alarm bells after reporting negative $1.6 billion in industrial operating cash flows in the first quarter, as working capital increased. Net profit fell to $1.19 billion, or 13 cents a share, from $2.76 billion, or 30 cents a share, in the same period a year ago.

The firm's profits actually fell less than what analysts had forecast, with earnings per share coming in at 28 cents, against the 25 cents estimated.

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