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General Electric Axes 12,000 Jobs in Its Power Business

- By Sydnee Gatewood

In an attempt to cut structural costs in 2018, General Electric Co. (GE) announced Thursday it is eliminating 12,000 jobs in its global power business.

The industrial conglomerate hopes to save $1 billion as demand for fossil fuel power plants dwindles, noting conditions in the traditional power markets have softened. In addition, the cuts align with GE"s efforts to reduce overall structural costs by $3.5 billion in 2017 and 2018.

"This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services," Russell Stokes, president and CEO of GE Power, said. "Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond."

While the company did not specify where the workforce reductions would occur, is did say it would include "professional and production employees."

GE"s shares were up more than 2% following the announcement. With a market cap of $156.27, its shares were trading around $18.02 with a price-earnings (P/E) ratio of 22.81, a price-book (P/B) ratio of 2.04 and a price-sales (P/S) ratio of 1.28. GuruFocus estimates the stock has lost approximately 44% year to date.


Disclosure: I do not own any stocks mentioned.

This article first appeared on GuruFocus.