General Electric reveals deeper regulatory probe, restructuring
WASHINGTON: General Electric Co slashed its dividend, said it faces a deepening federal accounting probe and vowed to restructure its power unit, as new chief executive Larry Culp took his first steps to revive the struggling conglomerate.
GE said the US Securities and Exchange Commission and Department of Justice had expanded investigations to include the US$ 22billion writedown of goodwill from the power division that the company reported on Tuesday.
GE shares slid on the New York Stock Exchange, touching their lowest in more than nine years.
The company posted a staggering loss of US$ 22.8 billion in the third quarter, among the largest in US corporate history.
The 126-year- old company, once the most valuable US corporation, has announced more than US$ 40 billion in writedowns and charges in less than a year.
Culp, who took over on Oct. 1, said GE will significantly miss its full-year cash flow target of about US$ 6 billion. He said he could not estimate full-year results until he gets more detail about the ailing power unit, which lost US$ 631 million in the third quarter.
GE all but eliminated its quarterly dividend, cutting it to a penny from 12 cents a share to conserve about US$ 4 billion in cash and strengthen the balance sheet. Analysts viewed that positively, relieved that Culp said there were no plans to raise equity capital as some had feared.
“My priorities in my first 100 days are positioning our businesses to win, starting with Power, and accelerating deleveraging,” Culp said in the results statement.
GE shares closed down 8.8 per cent at US$ 10.18.
In June, former CEO John Flannery, who was on the job for just 14 months, said GE would pare its portfolio to jet engines, power plants and renewable energy by disposing of its healthcare and Baker Hughes units, along with other restructuring already in the works. — Reuters