By Thomas Gryta and Saumya Vaishampayan 

General Electric Co. shares continued their long slide Monday even as new Chief Executive Larry Culp tried to put the market at ease about the direction of the conglomerate and its troubled power division.

The stock fell as much as 10% Monday to $7.72, its first drop below $8 on an intraday basis since March 2009. The stock has since rebounded off the low, recently trading at $8.11, down 5.5%.

The latest decline came after Mr. Culp said the company's power business is "getting close" to a bottom in an interview Monday with CNBC, indicating that woes for the unit could continue. That business has been plagued by issues like dropping global demand and turbine blade failures, which have contributed to the stock's swoon in recent months.

The power business has cut $700 million in costs this year and reduced its facility footprint by 20%, which Mr. Culp said are "good things to do in a manufacturing business, but it is not enough." He said there is still $7 billion in annual costs in the power business.

Mr. Culp jumped into the CEO role about six weeks ago and virtually eliminated the once-sacred dividend but also disclosed a criminal probe into GE's accounting and declined to provide any financial guidance.

The CEO's comments add to concerns that there might be more bad news from GE. "We do not think the businesses are fundamentally broken. However, modeling an appropriate near-term trough has proven difficult," Credit Suisse analyst John Walsh said in a note Monday. He added "poor visibility into fundamentals coupled with uncertainty around liabilities keep us sidelined."

Mr. Culp tried to address those questions in the interview, noting that retail investors are exiting the stock after the dividend cut and stressing that there are no liquidity issues. The company has access to about $40 billion in credit lines in place and is deleveraging the balance through assets sales.

He didn't signal any new moves but hinted at an intention to quicken the pace of those sales, highlighting options around the majority holding in Baker Hughes and plans to spin out the Healthcare division. He warned, though, that he "would rather talk about what we have accomplished after the fact than negotiate in public."

Mr. Culp backed the plans of previous CEO John Flannery to lower debt and streamline GE's hulking corporate structure that oversees its many businesses. The organization, once seen as an advantage, has become a cost center.

The stock, set for its fourth straight day of declines, has slumped nearly 30% since the company unveiled plans two weeks ago to cut its dividend to a penny, and is now down by more than 50% so far this year. It is the latest sign of distress for GE, which was the most valuable American company in the early 2000s and an original member of the Dow Jones Industrial Average. GE was removed from the 30-stock Dow industrials in June.

Kate Moore, chief equity strategist at BlackRock, doesn't see GE's stock drop as indicative of broader problems with industrial conglomerates or the economy.

"Investors are certainly watching price movement in a lot of these bellwether stocks, but I would suggest that there's unlikely to be a huge sentiment contagion because this is a specific security issue," she said.

Write to Thomas Gryta at thomas.gryta@wsj.com and Saumya Vaishampayan at saumya.vaishampayan@wsj.com

 

(END) Dow Jones Newswires

November 12, 2018 13:57 ET (18:57 GMT)

Copyright (c) 2018 Dow Jones & Company, Inc.
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