General Electric May Break Up As Stocks Continue To Plummet

BOSTON, MA — The largest company in Massachusetts could soon look a lot different. General Electric Co. stocks plummeted Tuesday after CEO John Flannery said the newly Boston-based company is taking a fresh look its structure, which could involve major GE divisions becoming separately traded units.

Flannery revealed serious issues with GE Capital's insurance portfolio. Specifics aside, it means the company faces a $6.2 billion after-tax charge in the fourth quarter — a hit Flannery called "deeply disappointing."

Meanwhile, GE Capital, the company's finance division, will suspend its dividend to the parent company for now. The fourth-quarter charge will be addressed through GE Capital reserve contributions of $15 billion over seven years. (You can read more about the nitty gritty of GE's predicament at The Wall Street Journal.)

"It's especially frustrating to have this type of development when we've been making progress on many of our key objectives," he said in a conference call with investors, according to the Associated Press.

Flannery envisions a slimmer GE focusing on energy, aviation, and health care divisions. Other divisions spinning out on their own, it's argued, would be more manageable.

GE was lured to Massachusetts with about $150 million in tax breaks and incentives in early 2016. Ever since then, it's been bad news for the multinational conglomerate, which has seen a shared drop of about 42 percent over the past year.

GE said in November that 2018 would be a "reset" year after announcing its quarterly dividend was being cut from 24 cents to 12 starting in December. You can read GE's full turnaround plan here.

(AP Photo/John Minchillo)

Materials from The Associated Press and State House News Service were used in this report