Light at the end of GE’s tun­nel? Com­pany plans to nar­row its fo­cus

Austin American-Statesman - - MONEY & MARKETS -

Gen­eral Elec­tric NEW YORK — slashed its div­i­dend in half and will at­tempt to vastly nar­row its fo­cus to three key sec­tors avi­a­tion, — health care and en­ergy

as the con­glom­er­ate with — early ties to Thomas Edi­son con­sid­ers shed­ding even its his­toric light­ing busi­ness.

The com­pany also pulled back on profit ex­pec­ta­tions Mon­day and shares slumped 7.2 per­cent, their big­gest one-day loss since the fi­nan­cial cri­sis was roil­ing the stock mar­ket in early 2009.

New Chair­man and CEO John Flan­nery said the com­pany is weigh­ing the fu­ture of its trans­porta­tion, in­dus­trial, and light­ing busi­nesses so that it can fo­cus more in­tently on its most prof­itable di­vi­sions.

GE’s quar­terly div­i­dend is be­ing cut to 12 cents to bring pay­outs to share­hold­ers closer in line with the amount of money that the com­pany is bring­ing in. Ac­cord­ing to S&P Global, GE will save $4 bil­lion a year.

Flan­nery, speak­ing at GE’s in­vestor meet­ing in New York, said 2018 will be a “re­set” year, and pro­jected a profit of be­tween $1 and $1.07 a share. That’s well be­low the $1.15 a share an­a­lysts ex­pected, ac­cord­ing to Fac­tSet.

GE also fore­cast weaker cash flows than an­a­lysts had pro­jected.

Last month Flan­nery said that GE would shed busi­ness units worth more than $20 bil­lion over the next year or two.

It has been par­ing busi­nesses for well over a decade now. He has been tasked with re­viv­ing growth and says the cost-cut­ting moves are in­tended to make GE sim­pler and stronger.

GE lost $1.47, or 7.2 per­cent, to $19.02. The stock hadn’t fallen that much in one day since March 30, 2009. It’s down 40 per­cent this year and trad­ing at five-year lows.

Gen­eral Elec­tric also said it may dis­tance it­self from Baker Hughes, the oil and gas gi­ant of which it bought a ma­jor­ity stake ear­lier this year.

Flan­nery said the com­pany seeks to lessen its ex­po­sure to volatile en­ergy prices.

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