General Electric Earnings Highlight Challenges for Fallen Giant

General Electric reported quarterly results on Wednesday that illustrated how far it has fallen, and the steep hill the company — once a titan of American industry — must climb to turn itself around.

There were no big surprises; those came earlier.

Last week, G.E. made a startling announcement that it would take a $6.2 billion charge in the fourth quarter, and set aside $15 billion over seven years to pay for obligations held by its finance unit, mainly on long-term care policies.

And last fall, shortly after taking over as chief executive, John Flannery told investors that G.E.’s big electricity-generation division had badly misjudged the market and produced too many power turbines, warning that it would take a year or more to fix the business.

At the time, G.E. sharply reduced its earnings forecast and cut its dividend by half, only its second payout cut since the Great Depression.

In a statement on Wednesday, Mr. Flannery acknowledged the challenges ahead, but also pointed to a bright spot — cash flow from industrial operations, while down, was higher than expected. That, he said, was a sign of “some of the early progress” from his cost-cutting steps.

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Overall, G.E. reported a net loss of $9.8 billion for the last three months of the year. That included the big charge for insurance obligations and a separate $3.5 billion charge related to tax reform in the United States.

The company’s operating earnings per share fell 41 percent to 27 cents a share, below the average estimate of analysts polled by Thomson Reuters. Revenue last year declined by 5 percent, to $31.4 billion, well below most analysts’ forecasts.

Sales in G.E.’s power unit in particular fell by 15 percent, to $9.4 billion in the quarter. Its operating profit of just $260 million was down 88 percent from nearly $2.2 billion in the same period a year ago. Last month, the company announced it would eliminate 12,000 jobs in that struggling business.

Still, the company’s aviation unit, a leading manufacturer of jet engines, and its health care business, which spans life sciences and medical-imaging equipment, delivered strong profits.

Revenue for the aviation division was flat at $7.2 billion, but the company reported that orders rose 11 percent in the quarter. The health care business saw sales grow by 6 percent to $5.4 billion.

Mr. Flannery, who took over in August, told investors last November that aviation, health care and power were G.E.’s three core businesses. That equates to two thriving divisions and one in need of fixing, albeit with a strong franchise in the power-generation business. G.E.’s lighting and railway locomotive divisions are already up for sale.

Yet last week, after the surprising setback because of insurance claims in GE Capital, Mr. Flannery suggested that even one of the three core businesses could be a candidate for a spinoff to generate returns for shareholders. The company’s share price has dropped by 44 percent over the past year, while the S&P 500 index has climbed 25 percent.