General Electric’s (GE) shares have fallen by double digits over the past two days. The stock fell sharply mid-day Tuesday, seemingly out of nowhere. GE CEO Larry Culp spoke Tuesday at the JPMorgan Aviation, Transportation & Industrials Conference. Culp divulged to analyst Stephen Tusa that GE’s 2019 cash flow would be negative due to weakness in its core Power segment:
“This is a multiyear turnaround in power,” Culp said. “I don’t want to sugarcoat that in any way, shape or form.”
GE also sees organic revenue increasing in the low-to-middle single digits in 2019.
Several media sources credited Culp’s interview with Tusa for the sell-off. Investors knew Power’s 2019 cash flow would be weak, but Culp’s admission that cash flow would be negative caught several investors unaware.
— Sean (@seanandlizs) March 6, 2019
According to the GE investor relations webpage, Culp’s conversation was supposed to start Tuesday at 1 PM.
Near the 10 minute mark of the webcast Culp spoke specifically about the issues surrounding Power.
Near the 12 minute mark Culp discussed the billions in losses Power suffered last year. He also admitted negative free cash flow (“FCF”) will continue in 2019.
Assuming Culp’s conversation with Tusa started at exactly 1 PM then his comments on Power’s negative cash flow came between 1:12PM and 1:14PM. Read more: