Just days after new General Electric Co. (CEO) - Get Report John Flannery added the role of chairman to his resume, well ahead of schedule, the manufacturing conglomerate announced sweeping leadership changes that may signal he's planning deep cuts to next year's financial targets.

CFO Jeffrey Bornstein, a 28-year-veteran, will retire at the end of December, along with John Rice, who had led divisions including energy and transportation, and Beth Comstock, head of the business innovations unit that included Current and GE Lighting, the Boston-based company said late Friday, Oct. 6. All three are vice chairs who reported directly to former CEO Jeffrey Immelt.

The shakeup comes as Flannery, who took over from Immelt on Aug. 1, undertakes a broad review of GE's businesses amid pressure from investors including activist Trian Partners to improve cash flow and profits while maintaining a dividend valued at $8 billion a year.

He is slated to provide an overview of his plans on Nov. 13, and Bornstein's departure from the CFO role before that -- and less than three months after he was promoted to vice chairman -- suggests the reset he proposes may be much harsher than expected, said Jeff Sprague, an analyst with Vertical Research Partners.

It's especially troubling since Bornstein "was portrayed as Mr. Flannery's partner in turning around the ship," Sprague said in a note to clients. "We thought it would be untenable for Mr. Bornstein to explain the bridge from the prior $2-plus 2018 construct to something much lower, and this now clearly seems the case."

The moves make a dividend cut at GE appear more likely, too, Sprague added. That could crush the stock, which dropped in after-hours trading on Friday, but keeping it gives the company little excess cash for expansion, he said.

"GE could end up in a better place once the dust settles," Sprague added, but "that better place could be with a starting point much lower for the stock price."

GE declined to make Bornstein, who was named CFO in 2013, available for an interview. 

"As John evaluates the strategy for GE and put his leadership team in place, he and I have concluded that this is the right time to bring in a new CFO with a fresh perspective to guide GE's ongoing efforts to reduce costs, drive growth, improve our performance and enhance shareholder value," Bornstein said in a statement.

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In his four years as finance chief, Bornstein worked with GE Capital chief Keith Sherin to wind down the sprawling lending division as Immelt returned GE to its core business of manufacturing with an emphasis on digital technology.

Helping to pare $190 billion in lending assets, Bornstein was "a dedicated and respected member of GE's leadership team" and a "valuable change agent," Flannery said in the statement.

Immelt, who had promoted Bornstein twice in four years,  originally planned to remain chairman through the end of the year, but said Monday, Oct. 2, that he was handing off the role three months early after determining that the leadership transition had proceeded smoothly.

The company said Jamie Miller, the former head of GE Transportation, would succeed Bornstein as CFO. Miller joined GE in 2008 after a career that included stints at insurance provider Anthem Inc. and accounting firm PricewaterhouseCoopers LLP.

At the manufacturer, she held the roles of controller and chief information officer before taking the reins at the locomotive division, which garnered $4.7 billion in sales last year. Sprague said he had considered her a "dark horse candidate" to succeed Immelt as CEO.

Shares of GE dropped less than 1% to $24.30 after the close of regular trading in New York on Friday. The shares had previously declined 4.8% to $24.39 since Flannery moved into the top job.

While the new CEO hasn't offered any hints about which businesses he might sell, he has said he's fully committed to digital manufacturing, the initiative championed by Immelt that led to the creation of Predix, a software platform that does for factories what Apple Inc.'s (AAPL) - Get Report iOS and Google's Android did for smartphones.

Analysts have suggested he's unlikely to propose a broad breakup like the one DowDupont (DWDP) - Get Report  CEO Ed Breen orchestrated with the influence of Trian.

Still, the company, founded by Thomas Edison in the late 1800s, has to consider all its options, Sprague said in an interview prior to the shakeup.

He noted that Baker Hughes (BHGE) - Get Report is positioned well for a possible spinoff after the deal completed earlier this year that left GE with control of the combined publicly-traded company.

Other Wall Street analysts have suggested GE may consider selling assets from lighting, which was part of Comstock's portfolio, to power conversion and even the locomotive division previously headed by Miller.

"The alternatives are to try to grind it out in a cost-cutting and portfolio-simplification story or to try something more dramatic," Sprague said. "Probably the odds favor the former, just restructuring and grinding it out, but I would think they have to be looking at things that could have a bigger effect on the company and change the narrative and change the trajectory of the portfolio.

GE is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells GE? Learn more now.

Updated from 6:03 p.m. on Friday, Oct. 6, 2017.

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