General Electric cuts its quarterly dividends to just a penny per share, from 12 cents.
Shareholders were getting dividends of 24 cents per share a year ago. The latest reduction in payout will save about $3.9 billion a year, as announced by GE – a company almost cash-strapped amidst its mounting debt. Its new CEO Larry Culp has yet to give out a definitive statement publicly on how he plans to turn around the conglomerate’s prospects, particularly of its power-equipment division. Sales from the power business had plunged -33% in Q3.
Culp decided to split the power division into two units: the gas product and services groups being one unit, while GE Power’s other segments, including steam, nuclear, grid solutions and power conversion will make up the other unit. However, GE said this month that it could fall short of meeting its earnings and cash-flow expectations for 2018 mainly due to the weakness in its power-equipment business.
Tuesday’s announcement of a dividend cut could either dampen GE investor sentiments even further due to drastically lowered dividend-incomes from the stock, or it could spur hope among long-term (and more optimistic) investors that more retained earnings could be channeled towards resuscitating the company’s operations.