As GE's Moment Of Truth Nears, Look For Answers To These 4 Questions

General Electric 's ( GE ) moment of truth dawns Monday, with new CEO John Flannery set to reveal a turnaround strategy for the troubled industrial giant.

[ibd-display-video id=2567460 width=50 float=left autostart=true] Flannery is expected to announce dramatic changes at GE, which is staring a cash crunch and meager profits in the face. He has said he will slash more than $20 billion in assets and costs, with Reuters reporting layoffs in its software division. He is likely to slash GE's prized high dividends to fund the turnaround.

But even those moves may not be bold enough to satisfy restless investors, who see GE stock stuck near five-year lows while those of other industrial giants like 3M ( MMM ), Siemens ( SIEGY ) and Honeywell ( HON ) have shot up. GE shares rose 2.5% to 20.49 on the stock market today , but have fallen 35% this year, wiping billions off the market capitalization of this 125-year-old giant.

Problems dog even its core units, such as GE Power. An executive shake-up is underway after former Chief Executive Jeff Immelt retired earlier than expected, with his own strategy to focus on GE's main industrial operations failing to produce the hoped-for gains. As his successor Flannery gears to share how he will put GE back on the right track, these are some questions that analysts are likely to ask:

Will GE's Portfolio Moves Be Transformative?

In just the past few weeks, speculation has ballooned about the businesses that could get sold or spun off. GE's aircraft-leasing, locomotive, and health care IT units are rumored to be headed to the chopping block. But analyst Deane Dray of RBC Capital Markets expects more than a nip-and-tuck.

"We're looking for an upheaval of the previous GE business model," he told Investor's Business Daily.

Dray has previously said "anything less than a promise to 'de-conglomerate' GE will be disappointing" and he thinks GE could make a wholesale "staged exit" from Baker Hughes ( BHGE ), the oilfield services company of which GE is a majority owner.

But in an interview, Dray said shedding the health care unit would be the "most telling" sign of GE's commitment to change. That segment, in his view, isn't broken but doesn't fit in GE's industrial infrastructure portfolio.

GE could shrink its portfolio to the core aviation and power businesses, he said, adding that he's especially looking for a "deep dive" on the strategy for power, which has been hit hard amid a shift to wind and solar, as well as other disruptive technologies.

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Will GE Cut Its Dividend - And By How Much?

Flannery has said there will be "no sacred cows" as he seeks to reshape GE. Many take that to mean a threat to the company's prized high dividends - GE stock has a 96-cent annual payout.

Many income investors have come to view GE's dividend as sacrosanct, in part because the Dow giant has paid it for years and consistently describes it as a top priority.

But a chorus of analysts recently pointed out that GE's businesses don't produce enough cash to support its rich dividend and that GE would do better using its cash to fund a new growth strategy.

Morningstar's Barbara Noverini is modeling a dividend cut to 65 cents next year. JPMorgan's Steve Tusa, a noted GE bear, says a "material" dividend cut is likely, but cautions that this strategy is not sustainable" in the long run.

"Ultimately, it's the state of the business that matters because things have to turn and grow to sustain whatever they decide longer term," he wrote in a recent note to clients.

RBC's Dray told IBD that GE's portfolio moves and divestitures will give it "some cover" to say a smaller notional dividend is in line with a smaller GE, rather than a reflection of cash constraints.

While Dray noted that the options market is pricing in a "more severe" 66% dividend cut, he considers a 30% cut more realistic.

Could - Or Should - GE Break Up?

"Everything is on the table," Flannery told investors last month.

That has led to murmurings that anything is possible - even a once-inconceivable breakup of the industrial giant, whose manufacturing businesses span jet engines, gas turbines, medical scanners, locomotives and more.

With that possibility in view, analysts have been crunching numbers as to how GE's market value stacks up against a piece-by-piece tally of its key business components.

JPMorgan's Steve Tusa conducted a sum-of-the-parts analysis and calculated the while GE's aviation and health care units are valued at or above sector averages, its power, renewable energy, transportation and lighting units are below them. He assigned GE stock with a fair value of 17, below the current value, and sees downside risk in the event of an expedited breakup.

"The standing stock price is likely overvalued, with aggressive portfolio rationalization likely to be a dilutive exercise, at least in the near term," Tusa wrote on Thursday.

Scott Davis, head of Melius Research, who also conducted an SOTP analysis, concluded that GE's current market cap of $176 billion puts it approximately $90 billion below what the company should be worth, based on the anticipated future earnings of each business unit.

Davis believes Flannery will need to break GE apart in a more aggressive fashion.

The plan for GE to sell or spin off $20 billion in assets amounts to roughly 12% of GE's market value. "We think 50% is more in the ballpark of what's needed," he said.

Will GE End Its Numbers Game?

New CFO Jamie Miller said in October she's considering a "back to basics" approach to financial reporting.

That comes amid growing disenchantment about how GE reports earnings - specifically, its use of several custom metrics - and how it handles contract assets worth billions on the balance sheet.

For example, GE offers at least three different measures for EPS: GAAP net income, GAAP income continuing operations, and industrial operating plus verticals earnings.

Dray says new accounting standards, more aligned with standard industry practices, would improve the quality of its reports and boost transparency.

He believes there is a very good chance that this highly sought change could come during the meeting GE's CEO will hold with analysts Monday.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.