General Electric Slashes its Dividend in Half, Shares Drop

Multinational conglomerate General Electric is not doing so well after the company experienced one of the worst shares days since 2009. The company cut its dividend in half on Monday thus saving $4.2 billion annually. The move was seen as trying to regain a proper footing after a decade’s worth of poor stock performance and low profits.

Shares have dropped from 24 cents a quarter to 12 cents. This is the third time the company has cut the payout in over a century. The reduction is part of the company’s plan to restructure its board of directors and sell of several business units along with its lighting business, founded by Thomas Edison.

General Electric shares fell to 7 percent on Monday right after the company sliced its dividend and revealed a restructuring plan on its investors day. Global investment bank, RBC Capital Markets, lowered its rating sector to accommodate General Electric shares, saying the company did not try hard enough to fix its business faults. Analyst, Deane Dray criticized General Electric’s new CEO John Flannery who replaced Jeff Immelt in August.

“We attribute the sharply negative stock reaction to the NOPv-13 unveiling of new CEO John Flannery’s turnaround plan to a number of disappointments and unsettling disclosures” she states.

General Electric CEO, John Flannery, said the decision to cut dividend was made in order to improve the company’s cash flow. GE’s estimated cash flow of $7 billion could not cover the $8.4 billion dividend payout.

The announcement was made at an analyst day in New York. Flannery also stated that General Electric will focus on health, aviation, and power segments.

General Electric is synonymous with American industry as it currently holds almost three thousand employees and has branches in 180 countries. The company started to falter while under the helm of Jeffrey R. Immelt. The former CEO retired after 16 years of activity.

Image Source: WikipediaCommons

Leave a Reply

Your email address will not be published. Required fields are marked *