How General Electric gambled on fossil fuel power, and lost

NEW YORK (Reuters) – Last March, executives at General Electric Co’s power-plant business gave Wall Street a surprisingly bullish forecast for the year. Despite flat demand for new natural gas power plants, they said, GE Power’s revenue and profit would rise. Showing data from financial firm Lazard and other sources, their presentation said natural gas, coal and even some nuclear power plants were the lowest-cost producers of electricity on the planet, cheaper than wind or solar. “Gas is the most economical energy source today,” one slide read. In the days following the conference, GE’s shares rose 2 percent. But GE’s forecast turned out to be a mirage. Rather than rising, GE Power’s profit fell 45 percent last year, forcing GE to slash its overall profit outlook and cut its dividend for only the second time since the Great Depression. Its shares have plunged more than 50 percent since the March forecast. Former CEO Jeff Immelt was replaced in August. John Flannery, GE’s new chief executive, blamed the forecast, along with poor management and other factors, for the power business meltdown. In January, he warned the pain would continue this year “and potentially be worse than expected.” What GE has not… continue reading

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