The Power Business Is Losing Steam
J.P. Morgan’s Stephen Tusa first pegged GE stock as a ticking time bomb back in May 2016. Recently, he’s offered critical thoughts about the power business and how the company was handling the division’s actual problems.
“We believe a full accounting of the situation with a closer look at the data, even a rudimentary review, supports our view that GE is indeed losing market share in a stable [heavy-duty gas turbine market], Tusa stated May 15 in a note to clients. “We see nothing here to change our negative view on Power, more so evidence of a company that appears to manage to headlines rather than on-the-ground fundamentals.”
Tusa is suggesting that Larry Culp and his version of GE is more sizzle than steak.
In late May, InvestorPlace’s Tom Taulli took GE to task, labeling its power business the company’s biggest headwind. He suggested that its 2015 acquisition of Alstom SA has hurt the company in a significant way.
So, take the two viewpoints together, and you get a power business that’s doing much worse than GE’s letting on. While CEO Larry Culp pretends to be transparent with investors, he’s not telling us the whole story. That should raise eyebrows on GE stock, considering that Power generates about 20% of its overall revenue.