Not that long ago, General Electric was seen as the very model of corporate success, the American capitalist system in action under a sprawling umbrella of synergized interests.
No more.
As the company limps into its investor day presentation Monday, it has gone from a paradigm of success to a morass of excess. Where GE once was held as a beacon of how a multinational conglomerate is supposed to function, it now faces an uncertain future and a bevy of questions from investors and analysts.
The crisis is not quite existential, but conditions are critical. Company executives must convince their constituency that there is a viable path forward.
"That will be up to GE," said Eric Ause, who covers GE for Fitch Ratings. "How they do it will be up to GE's management team. They've got a new CEO and a new CFO, and they've been making some changes to the board. That will all play into their long-term decisions, what the mix of their business should be and how they get there."
Investors have shown little confidence that even with the management shake-up, GE has a clear direction forward. The company has pledged to trim the parts of the operation that don't work, like GE Capital and the industrial solutions business, and focus on the future with core industrial businesses and GE Digital.
The market, though, has been hard to please.
GE shares have tumbled 37 percent in 2017 and are less than half where they stood when Jeffrey Immelt took over as CEO in September 2001. Immelt left the company in October, leaving behind a bevy of questions that likely will be addressed at Monday's event.
The shares traded higher by more than 2 percent on Friday as it appeared the company had already begun taking some of the hard steps it will unveil Monday by reportedly cutting staff in its GE Digital division.
The past and the present
The company's woes have been well-dissected —a flat-footed investment strategy in which decision-makers always seemed to be at least one step behind prevailing trends. GE made poorly timed bets against financials and for energy and paid the price.
More immediate, though, are the lingering questions over the dividend, which currently stands at 96 cents, translating to a 4.19 percent yield, or the highest in 30 years not including the financial crisis.
There's both an expectation and a drumbeat that the company either will pare or eliminate the dividend at the investor day. Company officials, though, haven't tipped their hand yet.
"We will be reviewing our outlook for 2017 and 2018 in terms of sources of cash and (cash flow from operating activities) generation," new CEO John Flannery said during the third-quarter earnings call. "We will do that with an appropriate balance of growth investment and dividend payout, and we will share our overall capital allocation framework with you in the November meeting."
That same call marked what, optimistically, could be a seminal moment for the company. Flannery stunned investors with his candor, openly acknowledging how poorly GE has performed and vowing to do better.
"While the company has many areas of strength, it's also clear from our current results that we need to make some major changes with urgency and a depth of purpose. Our results are unacceptable, to say the least," he said, adding: "Things will not stay the same at GE."
Accepting an activist
Just in the odd case that Flannery wasn't serious, he'll have somebody new looking over his shoulder to monitor the company's performance.
Among the indignities with which GE has had to deal is the presence of an activist investor. The board in October agreed to bring on Ed Garden, chief investment officer and founding partner at Trian Partners, the hedge fund he runs alongside the more high-profile Nelson Peltz.
Believing that the corporate restructuring was not moving quickly enough, Trian decided to get more aggressive in its oversight. Trian's stake in GE most recently was valued at $1.43 billion, down from $2.1 billion at the end of 2016.
"Like other GE shareholders, I am disappointed by the recent performance of GE's stock," Garden said when he was appointed. "But I continue to believe that GE represents an attractive long-term investment opportunity with significant upside."
Trian declined to comment. GE is in a quiet period heading into the investor day and declined comment, referring a reporter to recent presentations by Flannery.
A bevy of concerns
Other investors as well as analysts have been giving the company as hard time as well. The earnings call featured a number of pointed questions emanating from concerns over where GE is headed. GE badly whiffed on third-quarter earnings, with just 29 cents a share against expectations of 49 cents.
"So, how is that level of dividend sustainable without jeopardizing the future growth of the company?" UBS analyst Steve Winoker asked, reflecting similar sentiments from his cohorts.
Just four of 18 analysts have a buy rating on GE while two have it rated as outperform. Only one has a sell on the stock and three have an underperform on the shares, according to S&P Capital IQ. Most are on the fence, with six hold ratings.
Credit agencies are generally downbeat though not in despair. S&P has GE on credit watch negative and Fitch has a negative outlook, meaning the debt is still considered stable but could be downgraded if the company does not address concerns.
In addition to all the other concerns, GE has run up a huge pension liability that has investors concerned.
"There would be a lot of different viewpoints" on GE's health, Fitch's Ause said. "They've got good diversification, strong market positions in a number of key markets and a fair amount of financial flexibility."
Then there's the dividend
Yet perhaps no issue represents just now far this mighty company has fallen than the dividend. Having to take that away would amount to maybe the toughest blow the company, and its investors, would have to face.
"Clearly a dividend cut would free up a lot of flexibility for John Flannery to execute his restructuring; $8 billion a year in dividends is a big burden," longtime GE shareholder Jack De Gan told CNBC recently. "It would upset the shareholder base. And the stock would be dead money for [a] while. [But] this is when he should do it, if he's going to do it."
Investors have bought GE stock over the years in large part because it provided a reliable cash cow even in lean times. Income investors would lose an important incentive, possibly sending more shareholders to the exits.
The situation is exacerbated by the shrinking level of free cash flow, which is down to $7 billion, about half the normal level. The company's market cap has contracted by about one-third over the past year as it struggles with some fundamental business issues.
"They've been making some changes to the board. That will all play into their long-term decisions, what the mix of their business should be and how they get there," Ause said. "Their dividend is a significant cash use."
Then there's perception: A few years ago there were headlines about GE's maneuvering to get out of paying taxes; this year it was the embarrassing story of the company allocating not just one but two corporate jets for Immelt.
All of it will be on the table when management faces the investor music Monday.
"We're looking for some additional information and details on what they expect to do," Ause said. "It's hard to know how much they'll talk about Monday."
WATCH: An analyst looks at the challenges ahead for Flannery
