Northwest Arkansas Democrat-Gazette
GE cuts quarterly dividend by half
CEO reveals plans to sharpen focus, shed some divisions
General Electric, the nation’s largest industrial company, cut its dividend Monday, only the second time it has done so since the Great Depression.
The company announced before the start of stock trading that it would reduce its quarterly payout by half, to 12 cents a share from 24 cents a share. Shares of GE are down 38 percent this year and trading at five-year lows.
The dividend cut is the most emphatic move that John Flannery, GE’s new chief executive, has made since he took over in August. It is part of his broader plan to streamline the company by cutting costs and focusing on fewer businesses.
Last month, when GE reported disappointing financial results, Flannery said the company would sharpen its focus on fewer industrial businesses and shed at least $20 billion in assets over the next two years.
According to S&P Global, GE will save $4 billion a year.
There may well be more. Flannery added detail to his plans for GE’s future in a presentation Monday. The units to be disposed of, he said, would probably include the lighting and railway locomotives divisions, and an industrial solutions business that sells energy-distribution and monitoring equipment. Ten smaller assets, which Flannery declined to identify, will also be shed.
Flannery said GE was also exploring “exit options” for its 62.5 percent stake in Baker Hughes, a large oil-field equipment maker.
Besides Flannery and the company’s chief financial officer, Jamie Miller, executives from only two GE units — jet engines and electrical-power
generators — made presentations.
Emphasizing his belief in the vitality of a smaller GE — and nodding to products like electric generators, jet engines and medical-imaging equipment — Flannery accompanied his presentation with slides that said the company would continue to “power the world,” “transport people safely” and “save
lives.”
Yet his address also mentioned other businesses he described as “fundamentally strong,” including wind turbines for renewable energy and the company’s railroad-equipment unit, which is expected to be sold off over the next few years.
GE had nearly 300,000 employees worldwide at the end of last year. The impending sales of several businesses and other cost-cutting initiatives will undoubtedly leave it a smaller company.
Yet Flannery portrayed
the path ahead not as one of retreat but as one of opportunity, for GE.
Since becoming chief executive, Flannery has moved swiftly to roll back spending. He grounded the corporate jet fleet, stretched out the construction schedule for GE’s new headquarters in Boston, closed several international research-and-development labs, and trimmed the workforce in units like GE Digital, the company’s ambitious effort to become an industrial-software powerhouse.
Flannery had previously
announced an acceleration of cost-cutting goals established under his predecessor, Jeffrey R. Immelt, who targeted $1 billion annually this year and next. Flannery doubled the 2018 goal to $2 billion in expenses to be eliminated.
GE’s stock price, which had fallen by 35 percent as of Friday, was down more than 5 percent in midday trading Monday. It closed down $1.47, to $19.02