Question

Goodwill - General Electric: What is the controversial about GE $23 billion write off

Is the case of General Motors a perfect example of goodwill impairment

Answer 1

With the announcement of its leadership change, the Boston, Massachusetts-based company also said it would take a $23 billion goodwill impairment charge on its GE Power business. GE cut its outlook for free cash flow and EPS for 2018 “due to weaker performance” in GE Power, it said in a statement. The company said its businesses other than Power “are generally performing consistently with previous guidance.”

“We remain committed to strengthening the balance sheet including deleveraging,” Culp said. “We have a lot of work ahead of us to unlock the value of GE.”

Culp, who served as CEO and president of manufacturing company Danaher Corporation from 2000 to 2014, may “inspire confidence in turn-around potential,” UBS analyst Steven Winoker wrote in a note.

“A new CEO might not change the facts of the current headwinds, but as we have noted many times, it is hard to refute Larry Culp’s track record and accomplishments at Danaher during his tenure,” Winoker said. “Of course, GE is in a very different starting position than Danaher at the time with GE’s Power, balance sheet and cash challenges. However, we believe that CEO Culp will, at a minimum, re-baseline the company, drive execution and make long-term decisions that benefit the company and shareholders.”

Recently, concerns about gas turbine failures in Texas weighed on GE, though the issue has since been resolved.

GE’s struggles are well-known, and it’s been reflected in its underperforming stock price. Yahoo Finance readers voted it the worst company of 2017. The stock was an original member of the Dow Jones Industrial Average in 1896, but was unceremoniously removed in June.