"I think [GE] has to reset expectations much lower when it reports [earnings on Oct. 20], and perhaps even cut the dividend," Cramer said in an exclusive conference call with members of his Action Alerts PLUS club for investors. "That would take the stock to $20," or 13.3% below Wednesday's $23.07 close.
However, Cramer said the stock, which his charitable trust owns, could later rebound even after a dividend cut, "because [GE's] yield is almost the highest in the Dow."
He also believes new company CEO John Flannery -- who took over Aug. 1 from much-maligned former GE chief Jeffrey Immelt -- could turn around the beleaguered blue chip, whose stock price has basically gone nowhere in 20 years.
"I believe in John Flannery," Cramer said. "I think he's going to explain his plan for the business and I think it's going to be good."
The stockpicker added that he also likes newly appointed General Electric board member Ed Garden, chief investment officer of activist firm and major GE shareholder Trian Fund Management.
"We were thrilled when Ed Garden -- whom I know very well -- joined the board, because Trian [has] a lot of ideas about how to cut costs that eluded previous management," Cramer said.
Want to join in on Jim's monthly conference calls? Click here for a free 14-day trial subscription to Action Alerts PLUS and hear all of the latest call, get e-mails before Jim makes any trade and enjoy lots of other exclusive material.
More of What's Trending on TheStreet: