[ad_1]
General Electric's food problems have worsened and the return efforts of the iconic company now seem even more precarious.
GE Power, the most troubled part of the conglomerate in free fall, confirmed Thursday that one of its gas turbines had recently suffered a problem in a Texas power plant.
The failure was serious enough that Exelon (EXC) said it had shut down the power plant – and as a precaution, it also shut down another plant operating on the same GE turbine.
Worse, the problem involves GE & # 39; s (GE) A class HA turbine, a fast selling product on which the company relied to transform the power division.
GE said in a statement that it expected the "same problem" to affect other HA units. This suggests that GE could be at the mercy of significant costs at a time when he is running out of money. GE has received orders for more than 80 HA turbines and 30 are already in service.
Developments scared Wall Street, causing GE shares to fall 3% to $ 12.45. The stock, which was recently removed from the Dow Jones Industrial Average, has lost 60% of its value since the end of 2016. Reuters had previously announced news of the turbine failure.
"Another drop of shoes"
Turbine failure "raises both financial and fundamental uncertainty signals" for GE's energy sector, analyst JPMorgan Chase, C. Stephen Tusa said Thursday in a report titled "Another Shoe drops ".
Tusa, Jr., Wall Street's biggest bear, warned that turbine problems could cost GE significant sums of money, damage its reputation and even reduce the value of contract assets. He is now expecting GE's share price to fall to $ 10 by the end of 2019.
The problem is "emblematic of the more systemic problems" that arise when a company "focuses too much on short-term results," said Tusa, Jr.
In a statement, GE said it has "identified the solution" and is working with customers to resolve the issues. The company also highlighted the initial success of its HA gas turbine technology, which has recently achieved two world records for performance.
"HA gas turbines are achieving – and in many cases surpassing – their global performance targets at every customer site," the company said.
GE said the turbines have already reached more than 175,000 hours of operation and are the fastest-growing advanced technology turbines in the world.
Problems in Pakistan
Still, this is not the first time that GE's HA gas turbines have problems.
In Pakistan, three aircraft-equipped plants have recently experienced delays.
"These delays were caused by a mix of factors, some of which were under our control and others beyond our control," Russell Stokes, CEO of GE Power said Wednesday in a LinkedIn publication.
Stokes said GE is able to solve these problems and that power plants should provide enough electricity to power up to 7.3 million Pakistani homes for more than 30 years.
The stakes could hardly be higher for GE. The profit of the electrical activity fell by 58% in the second quarter. The collapse of GE Power has lowered the overall profit of the company by 30%, offsetting the strength of competition.
Under the new CEO, John Flannery, GE has begun a transformation of getting rid of its health care, locomotive, and oil and gas businesses. By raising cash to pay off its debts, GE is building around its famous jet engines.
However, GE Power is not going anywhere. It remains the most important division of GE, even if it struggles to adapt to the evolution of the fossil fuel sector in favor of renewable energies.
Over the past two decades, GE has won nearly half of the world's largest gas turbine orders. However, according to UBS, its market share has fallen to 11% this year.
The last problem of the turbine will not help this trend.
CNNMoney (New York) First published on September 20, 2018: 3:13 pm ET
Source link
