General Electric Co.’s (NYSE: GE) share price rose by nearly 2.7% last week, but the company did not relinquish its position as the worst performing equity of the 30 stocks that comprise the Dow Jones Industrial Average. The gain effectively offset the stock’s loss over the previous two weeks. GE stock closed Friday down 20.4% for the year to date.
This is GE’s seventh consecutive week as the Dow’s worst performer. The company still has a big lead over the second worst stock, Exxon Mobil Corp. (NYSE: XOM), now down 15.2%, and third-worst International Business Machines Corp. (NYSE: IBM), which is down 13.2% for the year.
Last week’s share price improvement in GE stock came following reports that the company is firing staff. Is GE returning to the days of Neutron Jack Welch?
Former CEO Jack Welch earned the nickname for firing about 100,000 GE employees after taking over in 1981. For those who miss the reference: in the 1970s a nuclear device known as a neutron bomb was developed that, upon detonation, would kill every living thing but leave the buildings standing.
While new CEO John Flannery hasn’t been on the job long enough to be compared to Welch, Reuters reported last Thursday that Flannery told his senior staff to get ready for cuts at the company’s Boston headquarters and other parts of the company that don’t produce revenue or profit. GE already has delayed construction of some portion of its new Boston head office.
The company confirmed it has a plan to cut $2 billion in spending by the end of next year, and Flannery is scheduled to discuss that plan at its annual general meeting in November.
Firing employees is a tried and true way to cut costs, but Flannery is unlikely to match Welch’s total. Flannery would have to shave around a third of them off in order to do that.
GE’s shares closed up about 0.6% Friday, at $25.14 in a 52-week range of $24.15 to $32.38. The consensus 12-month price target for the stock is $29.31.