General Electric Co.’s boss wants investors to know that all the negative headlines dogging the manufacturer don’t tell the whole story.

The company is already changing for the better after “a very tough year,” Chief Executive Officer John Flannery said in a letter to shareholders Monday. GE is rethinking its structure, cutting costs and enhancing management accountability. It’s also following through on a pledge to overhaul its board, with the nomination of an accounting expert and two former industrial CEOs.

Flannery is using the shareholder letter to lay out a path forward and push back against Wall Street analysts and the media for dwelling on the company’s string of recent failures. He’s fighting an uphill battle. GE is once again posting the year’s biggest decline on the Dow Jones Industrial Average after taking a $6.2 billion charge related to an old insurance portfolio and disclosing a U.S. Securities and Exchange Commission investigation into its finances.

GE Manufacturing Solutions facility in Fort Worth, Texas
A GE facility in Fort Worth, Texas Luke Sharrett/Bloomberg

“How the company is being portrayed in certain quarters is overwrought and, in most cases, does not reflect the reality of GE that our customers and employees are seeing around the world,” Flannery said in the letter. “There are things we need to fix. But we can. We know how to. And we will.”

GE fell 1 percent to $14.35 at 9:31 a.m. in New York. The shares tumbled 17 percent this year through Feb. 23, the biggest drop on the Dow Jones. The company was also the biggest laggard on the stock gauge last year, falling 45 percent.

CEO’s Confidence

The letter marks Flannery’s latest attempt to change the narrative around GE, which is grappling with one of the deepest slumps in its 126-year history. The new CEO, who took over Jeffrey Immelt’s longtime post last year, has acknowledged that internal mistakes have exacerbated the challenge of flagging demand for its products, such as gas turbines and locomotives.

Still, Flannery said he has faith in GE’s future, with areas such as software and 3-D printing offering hope. By narrowing the focus of GE’s digital business and targeting existing customers, the company should be able to double sales of its Predix operating system to $1 billion in 2018, Flannery said.

In a separate statement, GE announced the nomination of former Danaher Corp. CEO Larry Culp and Thomas Horton, who served as CEO of American Airlines, to the board in advance of the annual shareholder meeting scheduled for April 25.

Leslie Seidman, who was chairman of the Financial Accounting Standards Board, is also being put up for a board seat, GE said. That comes as GE faces an SEC investigation into its accounting for the insurance portfolio and service contracts in the industrial operations.

Narrower Focus

The company also announced the departure of eight current directors. Among those remaining are lead director Jack Brennan and Ed Garden, a representative of activist shareholder Trian Fund Management, who was appointed late last year. Brennan will help facilitate the transition and won’t stand for re-election in 2019, GE said.

GE has said it plans to focus on energy, aviation and health care as it sheds divisions such as transportation and lighting.

That may not be the end of the portfolio changes. Flannery has said he’s still evaluating the structure of the Boston-based conglomerate, and he’ll consider all options, including possibly separating the business units into publicly traded companies. The CEO reiterated that sentiment in his letter, but shied away from calling it a breakup.

Buffett Interest

“We will take steps only when we see a clear path to better long-term outcomes for GE,” Flannery said. “There will be a GE in the future, but it will look different from how it does today.”

GE’s stance has generated widespread interest, including from Warren Buffett. In an interview with CNBC, the billionaire investor both criticized GE’s accounting missteps and said he wouldn’t rule out an acquisition, depending on what GE is willing to sell.

“If we liked the business and the price was right, we could write a check for cash and that would apply to GE,” Buffett said. “We’re always in the market for a big business that we can understand and that we like.”

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