G.E.’s New C.E.O. Risks Repeating History

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Larry Culp is only six weeks into his job as the head of General Electric, but he has already fallen into a familiar pattern.

The chief executive of the $70 billion conglomerate said on Monday that he was looking to accelerate asset sales to reduce the company’s debt. But other problems, like G.E.’s troubled power business, still aren’t close to being solved. Mr. Culp may have been trying to stop G.E.’s share price slide; instead he exacerbated it.

Mr. Culp’s sudden appointment last month as the first outsider to lead the conglomerate in its 126-year history looked a lot like what G.E. needed. His record building up the conglomerate Danaher between 2000 and 2014 suggested that he could provide fresh thinking. G.E.’s woes go back decades, though, including determined expansion into financial services and former boss Jeff Immelt’s $11 billion purchase of France’s Alstom in 2015, just as demand for gas-fired electricity-generating turbines peaked. Unwinding those problems will take time.

Mr. Culp could use some early wins, but there might not be any.

Selling G.E.’s 62.5 percent stake in the oil-services company Baker Hughes sounds fairly straightforward. But the recent weakness in oil prices and disappointing third-quarter earnings have knocked a quarter off its market value since June, including a small decline after Mr. Culp’s comments on Monday. G.E.’s health care business, which is also on the chopping block, continues to grow revenue at a single-digit percent rate, but arranging an initial public offering, which Mr. Culp hinted at Monday, could take the better part of a year.

All of which suggests that it will take time to whittle down the $46.3 billion of debt attached to G.E.’s industrial businesses. The company’s operations consumed more cash than they generated in the first nine months of this year, and executives acknowledge that they are likely to miss net debt reduction targets set by Mr. Culp’s immediate predecessor John Flannery.

Under its previous bosses, G.E. demolished its credibility with investors by repeatedly missing targets and failing to draw a clear line under its problems. Mr. Culp, who has already overseen a $22 billion write-down of G.E.’s accounting good will, should be wary of doing the same. After his remarks on Monday knocked over 6 percent off its shares, G.E. now has a slightly smaller market capitalization than Danaher — a company with revenue just one-sixth the size.