GE’s new CEO sticks to old talking points in first earnings report

All eyes were on GE CEO Larry Culp for his first earnings release and analysts call, just under a month after he suddenly took control at the troubled Boston-based conglomerate.T. Rowe Price via Associated Press

If General Electric investors were looking to the new CEO for inspiration, they didn’t find it on Tuesday.

All eyes were on Larry Culp for his first earnings release and analysts call, just under a month after he suddenly took control at the troubled Boston-based conglomerate.

You could forgive shareholders if the call felt like déjà vu. Culp sounded many of the same notes as his predecessor, John Flannery. Clean up the power division, trim the dividend, streamline corporate expenses. Flannery announced key components of his divestiture plans — spin off the health care business and the controlling stake in Baker Hughes, for example — after Culp joined the GE board in April. Culp wasn’t about to undo what he had previously endorsed as the board’s lead outside member.

Still, GE offered another disappointing earnings report, and problems in power were again to blame. GE is still paying the price for its ill-fated Alstom power-and-grid acquisition in 2015, two CEOs ago.

The stock fell another 9 percent, closing at $10.18 a share, a low not seen since 2009. Many investors have already lost patience with GE. The report on Tuesday was just one more reason to bail.

Analysts, for the most part, want to give Culp more time — at least until early 2019 — to right the ship. After all, it’s been less than 30 days. They pressed Culp and his chief financial officer, Jamie Miller, for clues.

The executives offered few new details about their turnaround strategy, but some analysts seemed unfazed. Melius Research, for example, subsequently called Culp a “proven handyman” and a “rock star,” references to his undisputed success as CEO at a lesser-known conglomerate, Danaher Corp. (Melius analyst Scott Davis also wished Culp luck with GE, saying “better you than me” on the call.)

Culp leaned on his track record at Danaher during the call. Trust me, Culp essentially said, I’ve done this before. But Culp’s success there came from figuring out a way to acquire smaller businesses and efficiently fold them into Danaher’s lean-and-mean machine. That’s different from GE’s ambitious divestiture plan; Culp said some of the lessons, such as implementing change in a short period of time, can translate here.

Culp went to great lengths to praise GE’s 300,000-person workforce, their talent and their commitment. It was an important move for GE’s first outsider CEO; workers pay attention to these calls, too. He even likened GE to the Red Sox, saying that Alex Cora had just won a World Series in his first year as Sox manager with largely the same team that was on the field a year ago.

But Culp’s biggest challenge is winning over shareholders, not his new colleagues. His approach may be similar to Flannery’s. But he’ll have to move more quickly than his predecessor if he hopes to regain the trust and faith of investors.