In his first few months as chief executive, Mr. Flannery — a 30-year G.E. veteran who is a finance expert and most recently ran the health care business — has made some moves that analysts regard as telling if largely symbolic. He has grounded the corporate jets, slashed the company car program and slowed the pace of spending on G.E.’s new corporate headquarters in Boston.
In addition, three top executives close to his predecessor, Jeffrey R. Immelt, have announced their departures. And Trian Fund Management, an activist investor, which had pressured Mr. Immelt’s team to improve financial performance, has been given a seat on the G.E. board.
“He’s sending a clear signal to everyone in the company: There’s a new sheriff in town,” said Deane Dray, an analyst at RBC Capital Markets.
The details released Friday included news that the company’s cost-cutting target for next year would be doubled, to reduce expenses by $2 billion, including at the top. G.E., the nation’s largest industrial company, with a market value above $200 billion, will have a “much smaller and focused” corporate staff, Mr. Flannery said.
G.E. also announced it would sell off $20 billion worth of businesses over the next year or two. Mr. Flannery did not say what those operations would be, but further information may come next month when Mr. Flannery addresses analysts and investors at an event billed as an in-depth presentation of his strategy.
The winnowing, he said, is intended to focus G.E.’s capital investment and management time on the most promising businesses. While he said there were “no sacred cows,” Mr. Flannery, in an interview, singled out the company’s jet engines and health care — imaging equipment and biosciences — as businesses with “real opportunity for organic investment.”
In the conference call, Mr. Flannery described G.E. as a company with strong industrial businesses that mainly needed to be managed more efficiently. “This is largely a self-help exercise,” he said.
But two of its businesses — power generation and oil and gas — are dragging down the financial performance of the overall corporation.
In oil and gas, the challenge has been evident for years. G.E. decided to build up its oil and gas business, for both onshore and offshore exploration and production, just as oil prices plummeted. Mr. Immelt and his team stayed with that strategy, reasoning that it was a sound long-term move by creating a more valuable business when energy markets turned.
In July, G.E. completed the merger of its oil and gas business with Baker Hughes into a separate company, in which G.E. holds a 62.5 percent stake. The revenue from that merged business is why G.E.’s revenue grew 14 percent, to $33.5 billion, in the third quarter.
But the company reported a 9 percent decline in operating profits per share of $2.6 billion, or 29 cents a share. That figure excluded large, one-time charges, totaling 16 cents a share, mainly for its cost-cutting programs and writing down the value of inventory. The average estimate of Wall Street analysts was 49 cents a share, as compiled by Thomson Reuters IBES.
The recent drop in its big power-generation business is a surprise, and a major reason for G.E.’s poor quarterly performance and scaled-back outlook for the year. The company now says it expects to report operating earnings per share of $1.05 to $1.10 a share, down from the previous forecast of $1.60 a share.
G.E. has industry-leading technology in its gas turbine business, especially its new line of the large power generators, each of which produces enough electricity to light up 500,000 households. Worldwide, 30 percent of electricity is generated by G.E. equipment.
But G.E. badly misjudged the broad market for smaller and replacement power-generating equipment, aggressively building new machines, and inventory piled up. Renewable power sources have somewhat curbed demand for new gas turbines, as have energy conservation programs, especially in developed nations.
Still, Mr. Flannery said in the interview: “It never should have happened. We screwed up running this thing.”
The entire top management team of the power-generation unit, he said, has been replaced.
The decline in the power business also put a big dent in G.E.’s cash flow, reducing the corporate total by an estimated $3 billion, to about $7 billion this year, the company said.
That has raised questions about G.E.’s ability to keep paying its current dividend, which consumes about $8 billion a year, analysts estimate.
In response to analysts’ questions, Mr. Flannery said that maintaining the dividend was a “priority” and that the company’s cash flow should improve next year. But he declined to say more, noting that subject and others would be addressed at the briefing on Nov. 13.