The stock was down 5 percent on Tuesday, trading under $18 a share, bringing the two-day loss to 12 percent. Monday’s 7 percent decline on GE’s investor day changes was its worst session since April 2009.
“I’m not trying to run the company for the reaction on Monday and Tuesday or Wednesday of this week,” Flannery said on “Squawk on the Street.”
“We have a long-term plan. We have a lot of work to do,” he added. “We’ve reinvented ourselves many, many, many times.”
Addressing why an investor should buy the stock, Flannery pointed to the outlook over the next three to five years. “That’s what someone should buy,” he said. “Is it going to happen in two months, four months, six months? No, there’s operational things we need change in the company.” But he added, “There’s something under the hood that’s worth considering as well.”
Cutting the dividend was “in the best interest of the shareholders and the company,” Flannery told CNBC, trying to assure investors who depend on the dividend payout that the decision was not taken lightly. “The most important thing for us to do now is improve the results of the company, improve the cash flow of the company, be incredibly disciplined about how we invest,” he added. “As we grow the earnings and cash, job one, we’ll move the dividend forward, too.”
“I have a strong command of what’s going on in the company,” Flannery added. But he acknowledged “it is ‘show me’ time.” He said he’s spent 100 days “crawling through the company,” and he has a “strong command” of the issues.
“It’s quite clear we’ve got strong franchises at the core of this company,” Flannery said. He said its power business was mismanaged and it needs fixing but “health care is strong, aviation is strong.” Any decisions on selling or keeping business units will be based on fundamentals, he said.
During Monday’s investor day presentation, Flannery said the future of GE is going to be “more focused,” as it looks to shed more than $20 billion of assets. He also outlined steps to turn GE into a smaller company around three businesses: power, aviation and health care. That’s a sharp divergence from the high-flying aggressiveness of Jeff Immelt and Jack Welch. GE handed Flannery the reigns earlier this year, after Immelt retired.
GE on Monday also cut adjusted 2018 earnings to $1 per share to $1.07 per share, and pegged free cash flow at significantly reduced levels of $6 billion to $7 billion.
“I’ve been quite clear where we have underperformed and about how to fix that,” Flannery said Tuesday. “Going back to the past is not productive.” He also addressed concerns about GE’s accounting tactics, saying “there’s no accounting issue. No one’s been had.” GE has also been criticized with some saying the company has become unwieldy and unmanageable.
As part of the corporate overhaul, GE also plans to reduce its board of directors from 18 to 12. Three of them will be new members.
Jack Brennan will remain lead director, Flannery said Tuesday, adding “It’s not a possibility” that he will depart. “Jack has a tremendous track record, a tremendous leader. He’s been incredibly supportive with me. I don’t see any change there,” he said.
“We’re looking for industry expertise in these three new directors,” he reiterated, “more digital and technology orientation going forward.”
Last month, Ed Garden, co-founder with Nelson Peltz of the $13 billion Trian Partners hedge fund, was named to the GE board after the departure of several top executives, including CFO Jeff Bornstein.
The billionaire activist investor Peltz has been pushing for changes at GE since he unveiled in October 2015 what was a roughly a $2.5 billion investment in the company at the time. As of Tuesday’s open of $18.79 per share, Peltz’s GE stake of nearly 70.9 million shares was worth just $1.33 billion.
Over the past two years, GE shares lost about 25 percent of their value compared with a 30 percent gain for the S&P 500.